Over the years, I have heard the angst and agony of a loved one’s passing leaving the partner in the dark about state of their finances and the details of the net worth of the estate. It has caused untold stress on the surviving spouse and probably ended up costing the estate. I was reminded about this recently when I came across a video by David Chilton, the financial guru of the Wealthy Barber fame, who now does promotional work for RBC. The subject of his video revolved around two estate planning mistakes that he suggests are quite common and I thought I would share his thoughts with you.
His first suggestion was that you should keep a detailed net worth statement and keep it with your will. He says, “Update it often; this is not that much work but what a difference it make to your executor and to your beneficiaries. Over and over again I heard stories about assets being discovered years after an estate was settled…or at least thought to be settled.”
“He didn’t know that mom had a safety deposit box at a bank branch she left years ago. I was shocked to find out that Dad had shares in two private companies….he never mentioned them. Our family didn’t know that our parents had lent money to their neighbours until Clare stumbled across a document in an old photo album two years after Dad died.”
Chilton claims these stories are quite common, and goes on to say, “Help your executor out. List all your assets and important associated details. Where can they be found? What passwords are needed? What does your executor need to know from a tax perspective. For example, what did you pay for the private company shares? Where are the safety deposit box keys?”
The Wealthy Barber’s second suggestion involved checking your will at least once every two years to see if it needs updating.
He says,”I asked 12 people if their will was perfectly representative of their current wishes and ten said no.” Some of the reasons he found were details like, “I want to change my charity designation, my sister and I have made up now or Charlie was in an accident and needs extra help. Oh heck, one of my beneficiaries has passed away.”
Chilton’s final appeal was:
“Life changes quickly. Make it a habit to review your will regularly. It won’t take more than an hour in most cases. Call your lawyer with the desired changes, if any. It’s not going to be a big deal. It’s not going to be a big expense. … But it can make a big difference so keep a detailed net worth statement and an updated will.”