When I talk to people about estate planning they often tell me, “I really don’t have much to think about, my situation is simple.”
Sometimes it really is true. There are people who have no assets, no relatives, no friends and no favourite charities, but not many.
Even if you have few assets, you may not have a simple estate. For most of us, it takes just a little time and gentle prodding to realize we have important choices to make.
In our daily lives, “simple” often means the same as uncomplicated. In an estate planning situation, “simple” means something else, something more akin to “clear-cut”. It means that someone has laid out a transparent plan of action for his/her Estate Trustee to follow. Everything has been considered and there are no surprises.
That said, in most cases, the opposite of simple entails letting or forcing the Estate Trustee substitute to his/her discretion on how to finalize the estate. They must use their own judgment, make guesses about your intentions and possibly do what they think is right rather than what you would have liked had they been able to ask.
Two More Things to Consider in a Simple Estate
While you may think your estate is simple, that may be because you have forgotten a couple of important things. For example, many people forget to include life insurance proceeds in the amount that will be distributed should they die. This is understandable since they do not have the money to work with when alive.
Second, the more modest the estate, the more important it is to get it right. If a rich person makes mistakes that cost the estate money, there is still a sizeable estate left for his/her beneficiaries. If a person of more modest means makes similar mistakes, it could put a serious dent into his/her intentions.