Designating beneficiaries can often seem like the most straight-forward part of estate planning. However, common mistakes and misunderstandings can make this foundational part of a plan difficult in estate administration. Here are some beneficiary designation issues that can cause estate administration woes for Ontario executors.
It is common for people to state in their will that a specific dollar amount should go to an individual. But what happens if that amount of money is not available? This can become a big issue for executors. It can help to allocate gifts in terms of percentages of net worth, particular trusts or bank accounts. Otherwise, it is vital to ensure the funds are available.
Another issue can arise when spouses are named as a beneficiary. While this seems like a logical move, it may not be ideal if there are other people who should be receiving funds, such as children from a previous marriage. Understanding the magnitude of responsibility and power given to a sole beneficiary is important before deciding who should be given the title.
Planning such things in advance is important for a number of reasons. Besides allowing for the proper communication and oversight, it limits the possibility that an estate plan will be called into question when it is clearly put together with foresight and understanding. Last-minute changes, especially controversial ones, can lead to estate litigation. Those who are responsible for estate administration can prepare themselves for anything that may arise in executing a will by speaking with an Ontario estate planning lawyer.