This article appears in the November 2020 issue of Investment Executive. Subscribe to the print edition, read the digital edition or read the articles online.
Covid-19 has affected us all this year, but front-line workers are particularly aware of the danger from the virus. That awareness often translates into action, and people are turning to their financial advisors for recommendations on estate planning and related documents, including wills, powers of attorney (POAs) and medical directives.
“The pandemic has highlighted the need to plan. You never know when life is going to throw you a curveball, and you need to ensure you have a plan in place that contemplates both death and disability,” says Christine Van Cauwenberghe, vice-president of tax and estate planning at IG Wealth Management in Winnipeg.
While you want to support clients in high-risk occupations and move quickly to help ensure a broad range of protection is in place, the reality is that the approach to estate planning does not change for front-line workers during Covid-19.
“The estate planning process generally isn’t impacted by what you do for a living. Every adult Canadian should have an estate plan in place, regardless of their occupation,” Van Cauwenberghe notes.
Van Cauwenberghe recommends you regularly incorporate the topic of estate planning into discussions with clients so they know it is nothing to be alarmed about. “In some cases,” she says, “it does take a little bit of fear to prompt clients to take action, but in other cases it simply takes regular reminders.”
Nudging may be necessary. Clients may feel they do not need a will, POAs and other documents for reasons such as their young age, lack of assets, good health and hectic schedule.
“Advisors should push gently to have these documents in place,” says Karen Henderson, founder and CEO of the Long Term Care Planning Network in Toronto, an advisor-only web portal for aging and long-term care education.
That push may be given by providing context. This may include a Covid-19 reality check, says David Gorveatte, a certified financial planner who works under the umbrella of Investia Financial Services Inc. in Fredericton. “You [can] ask [clients] if they’ve had any friends or co-workers who got infected. Then ask, ‘Have you thought about what [would happen] if it was you?’”
Giving examples that apply to matters other than Covid also is helpful. When Van Cauwenberghe begins discussions about a POA, she offers the scenario of a client who had not drawn up a POA and was in a car accident.
“[That] was a very difficult situation, made even more difficult for his family by having to apply to court to act on his behalf to manage his finances. I really don’t want any of my other clients or their families to have to go through that,” Van Cauwenberghe says.
She then asks clients: “Would it be possible for me to please take a look at your [POA documents] to make sure that everything is in place in the event something unexpected happens?”
Van Cauwenberghe recommends you include wills and POAs on the checklist you go over with clients. “If it becomes apparent that the client hasn’t provided you with [those documents] in a while, you can identify that as a gap in their planning.”
Once reluctance to discuss estate planning and its offshoots has abated, you will find yourself in the role of educator. For example, if the topic is a POA, you should be prepared to explain who can act as an attorney, the qualities of a good attorney and how a POA could potentially be abused.
This information helps your client, both in preparing for the process and in potential cost savings, says Henderson. “Time is money when you meet with a lawyer,” she says. “You are adding value when you meet with a client [beforehand].”
You can also provide insight into what a lawyer will talk about during a meeting to prepare a will, health-care directive and POA. Other insights include: the benefits of a lawyer versus a do-it-yourself kit; any concerns about residency; and the reasons for having all of these documents in place.
Clients don’t always understand the purpose and the practicalities of a will, Van Cauwenberghe adds. “Some clients [believe] they have to decide who is going to receive every last piece of Tupperware in their home before they can sign their will when, in fact, most wills simply divide an estate into portions, and gifts of specific items usually aren’t even recommended,” she says.
Next on the checklist are personal directives, also called health-care or medical directives. In some provinces, these are a component of a POA document; in others, they are separate. Two elements are particularly important: the designated contact person and what to include.
A lot of people don’t want to be the designated contact person and thus bear the responsibility of making life-and-death decisions for someone else, notes Henderson: “It’s a huge undertaking.”
For those willing to take on the responsibility, Henderson adds, knowledge of the health-care system and having been a caregiver are helpful.
In the case of a personal directive, Van Cauwenberghe recommends that clients speak to their physician about these types of documents before speaking to anyone else. “Sometimes people insert language into these documents that their own doctors don’t even understand,” she says. “Their doctor might have some suggestions as to the instructions they would find helpful if an emergency ever arose.”
Clients should also ask the proposed decision-maker if they would be willing to act, Van Cauwenberghe adds. Otherwise, it’s “difficult if the person who is supposed to make health-care decisions has never had a conversation with the client about what sort of treatments they would or wouldn’t want in the event of emergency. Some clients also choose people who live far away, making it impractical for them to act. Simply talking the issue through with [their] family and proposed decision-makers can iron out problems in advance.”
Insurance is another topic to discuss with clients. “If [a client] works in higher-risk situations, [they] might get charged an extra premium cost due to that risk, so be prepared for this and [tell them to] ask for a premium adjustment when [they] are no longer in that high-risk job,” Gorveatte says. “Maximizing group coverage is always a good idea as well.”
Van Cauwenberghe notes that insurance becomes more expensive as people age and their health deteriorates. Clients need to know this: “The sooner you put a plan in place, the better off both you and your family will be.”
In addition to information, you can help with motivation. Showing an interest in all elements of estate planning and making meaningful suggestions can help clients become both more comfortable with and more aware of the value of the estate planning process.
While the layers of protection provided by an estate plan are important, there are more benefits than just practicality, Gorveatte notes. “I also explain that when other [clients] have completed the task,” he says, “they [experience] a huge sense of relief.”