There’s a prime opportunity for financial advisors to discuss estate planning with their clients as a new report from Toronto-Dominion Bank (TD) published on Wednesday finds that 50% of Canadians don’t have a will, and 28% are between the ages of 53 and 71.
In many cases, people would rather avoid discussing their intentions than step into a potential minefield of issues that such discussions may trigger. Indeed, among those surveyed for the TD report who lack a will, 39% say they haven’t shared their wishes with their children.
Family drama may inevitably spill over into discussions about how to divide assets up as siblings wrestle over the fate of the family business or the sale of the summer cottage. However, much of this conflict can be mitigated if there’s a will in place, says Rowena Chan, senior vice president of TD Wealth’s financial planning division, in a statement.
“If you do not have a will, it can create a lot of conflict and unnecessary animosity amongst family members during an already difficult time — regardless of how much or how little you plan to leave behind,” she notes.
Of the 6,020 Canadians polled for the report, 19% who received a family inheritance experienced conflict with their siblings or extended family, with much of the bad blood stemming from dealing with property and investment assets.
Splitting cash and investments among family members may be more “straightforward” than dividing other assets with sentimental value, the report notes, but there also tax implications associated with these hard assets of which individuals aren’t always aware.
In such cases, advisors might connect clients with a tax lawyer or an accountant who can weigh in on what approach they might take to maximize the amount their beneficiaries are entitled to receive.
Without a will in place, the default is for the government to act as the executor, divvying up assets based on provincial laws, Chan notes.
Advisors or financial planners can offer guidance throughout the estate-planning process, whether it’s helping clients manage the emotional side of it or reminding clients to do a periodic review of their estate plan, perhaps every three to five years to reflect any developments, Chan suggests.
The survey also found that deciding what to do with the family business is another contentious subject, with 13% of those who encountered conflict saying this was tricky to resolve.
In addition to drafting a will that outlines who receives valuable heirlooms and who takes a larger cut from the sale of a property, there also needs to be a succession plan for the business, the report notes. Designated successors, Chan adds, should be included in the process of putting a plan together so the stakes are known at the outset.
Environics Research Group collected the responses on behalf of TD from Feb. 9-16.
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