The multitrillion-dollar inheritance bonanza that baby boomers have been told to expect from their frugal parents may not turn out to be as lucrative as predicted. The reason: lack of foresight, outdated ideas, and sheer laziness.

Indeed, with only about half of Canadian adults having made a will, some financial experts predict that the real windfall may await estate litigation lawyers as they sort out family squabbles over cottages, stock portfolios and prized comic book collections. Estate planners and advisers encounter many myths and misconceptions among both future donors and the hopeful recipients. Here are some of the most common, and most expensive:

I'm not rich enough to worry about estate planning

"The words 'estate' and 'trust' conjure up images of grandiose mansions, stables and fancy cars," says Sandy Cardy, senior vice-president of tax and estate planning at Mackenzie Financial Corp.

In reality, even people with small nest eggs will have to share them with the government; the issue is how much and when, and that's where planning comes in.

"If you die without a will, your assets are distributed according to provincial legislation," warns Adrian Mastracci, president of KCM Wealth Management in Vancouver.

That means not just losing control of where your money goes, but possibly additional time and fees to settle your estate.

But money isn't the only concern. Other decisions — such as who manages your affairs after you're gone, what happens in case you're incapacitated, who gets the family heirlooms with more sentimental than cash value — have little to do with your net worth. They're personal issues that require planning, as well as a set of clear instructions for those who will be putting the affairs in order.

Joint ownership will keep the taxman at bay

When a person dies, an asset they hold jointly with another person automatically passes to that individual without being subject to estate taxes. Not surprisingly, putting assets into joint ownership with a spouse or the kids has become a popular tactic among seniors — one that ignores many potential risks.

For example, by making your child a joint owner of your home, you're no longer free to sell or rent it as you wish. If young Johnny or Joanie has creditors, they could come after your house, as could your offspring's aggrieved spouse seeking assets in a divorce settlement.

Carefully laid plans to minimize taxes, such as testamentary trusts for children, may also get thrown out the window, as a jointly owned asset will often be ineligible for such treatment. And while your kids may save on probate fees (read more on this issue below), they can get hit with hefty capital gains taxes if they want to sell the property they inherit this way.

In fact, just the act of making someone a co-owner of an asset such as a stock portfolio could trigger capital gains, says Debbie Ammeter, vice-president of advanced financial planning at Investors Group Inc., because you're deemed to have disposed of half the account.

Perhaps most importantly, joint accounts aren't conducive to family peace. If one offspring is named a joint owner of an asset, the other kids may feel slighted. Mackenzie Financial's Cardy recommends that anyone establishing a joint ownership write a letter explaining the rationale and whether the asset is intended to be split with others as part of the estate, and then have all the heirs sign it.

My parents' thriftiness will make me rich

Whether it's $1 trillion or $5 trillion (estimates vary), the general consensus is that the 9.4 million Canadian boomers are in for a collective 13-figure windfall. The problem with that conclusion twofold: 1. The predictions may be overly optimistic. 2. Not everyone will profit.

Some of those estimates, made in the 1990s, failed to take into account a recent run of historically low interest rates that have kept portfolios from accumulating additional value quickly. As well, people are living — and spending — longer, something the statistical models didn't fully account for.

"As a result," says Ammeter, "the size of the estate may not be what people have expected, or the date that they get it may be later than in previous generations."

That means if you've been banking on an inheritance to bail you out of financial difficulty, you may be in for a shock. Your parents may not only end up spending a good chunk of their savings, but one or both of them may still be around when you retire.

Above all, I've got to minimize probate fees

Probate is the fee your estate pays to the government for certifying your will and the value of your property. Probate fees can be trimmed by placing assets outside the estate; for example, making your child or spouse, rather than your estate, the beneficiary of your RRSP.

However, advisers stress the need to focus on the big picture.

"People think probate fees are much higher than they are," says Mastracci. "They go to great lengths to avoid that fee, spending much more time and effort and money," than it's worth.

Probate fees vary from province to province, and while they're nothing to sneeze at — in Ontario, for example, the 1.5 per cent probate would eat up roughly $15,000 of a million-dollar estate — capital gains taxes can be a bigger burden.

It's all about what happens after I'm dead

An estate plan can involve giving money away during your lifetime. Perhaps one of your children has fallen on hard times, or you discover that transferring the cottage to your kids now offers financial benefits over doing it later. Or maybe you want to make a mark in philanthropy while you're still around to enjoy its satisfaction — and the tax credit.

"Gifting" your assets while you're alive reduces estate tax since no probate applies, and it simplifies your estate.

My kids can sort it out after I'm gone

Unless you want to punish your children, don't lay that burden on them.

Estate planners see the fallout all the time. As long as the parent is around, the conflicts between family factions remain under wraps. Afterwards: war.

"Silence does not prevent disputes, silence breeds legal battles," Cardy says.

[an error occurred while processing this directive]