Estate Planning

As the old saying goes, the only certainties in life are death and taxes. Given this reality, it’s beneficial to have an up-to-date estate plan that reflects your wishes for potential care needs and distributing your assets to loved ones, while also minimizing your estate’s tax liability to help facilitate an effective transfer of wealth.

Don’t Wait to Communicate your Wealth Plan

While creating a comprehensive estate plan is important, it’s equally important to communicate your plan to family members – as well as your specific expectations of them. Why? Here are three common reasons:

  1. Gain clarity. If you don’t share key details of your estate plan with family, they won’t know your wishes or how they’ll be impacted. It’s better to gather your loved ones now to explain elements of your estate plan and why you made certain decisions (e.g., your choice of estate executor).

    Failing to discuss your plan could cause confusion or uncertainty down the road, at a time when family is already grieving. As well, by communicating your wishes and values, and allowing loved ones to ask questions, everyone will be equally informed about your plan and desired legacy. This alignment may help avoid family conflict, disagreements or perhaps even legal action later.
  2. Get organized.  People have different levels of complexity in their life, but it’s safe to say almost everyone has a number of accounts, passwords, assorted bills and documents, etc. that would be challenging to identify or track down without a formal estate plan that provides the required direction. 

    You don’t want your family to scramble when their emotions are already frayed, searching for information and paperwork needed to make critical decisions. Since your financial institutions, advisor, lawyer, accountant, etc. will likely require certain info – including your will and powers of attorney – it’s valuable to prepare trusted family members to protect your privacy and share specific info on an as-needed basis. Some people may ask their estate planning lawyer to securely store their “master list” of vital information.
  3. Undertake wealth planning. Not only does your estate plan cover important aspects of your financial affairs, but it also affects your heirs and their financial life. An open discussion allows you to explain how you’ve decided to allocate your assets. This could be the first detailed exposure your family has regarding the extent of your wealth. Empowered by having an idea of what their inheritance might be, they can begin thinking about incorporating it into their existing wealth plan (or it could encourage them to get started with wealth planning).

    If you own a business, communicating your estate plan also lets loved ones know whether you intend for the business to be sold or for family members to take over. If you’re part of a blended family, have dependent children or ones with special needs, an estate plan can address these complexities upfront. Talking about your plans now should help your heirs be more financially prepared so they can handle their inheritance responsibly.

Intergenerational Wealth Planning

One of the positive aspects of intergenerational wealth planning is the “multiplier effect” it may have as you extend the benefits to other family members, such as children and perhaps grandchildren. Integrated advice is valuable because it considers your family’s complete financial circumstances, taking into account how one part of the financial equation may impact others. 

In fact, there are many benefits to having one advisory team look after an extended family’s finances. For the younger generation, access to highly sophisticated wealth management services from a trusted advisor is not always an option due to high minimums. But most advisors will waive these requirements for family members of their clients. And when the time comes for the eventual transfer of wealth, the same values that have helped your parents and grandparents build and sustain their financial legacy will continue to prevail for the next generation. 

A long-term, multi-generational wealth plan is designed to grow and preserve family wealth. An ideal way to achieve this outcome is to engage the services of a trusted advisory team that can establish a 360-degree view of your family’s financial goals, opportunities, challenges, values and other unique circumstances. Holistic planning is like solving a puzzle as your advisory team figures out how certain financial variables fit together. 

The team can also become familiar with each family member individually and understand family dynamics to help build consensus and avoid undue conflict. After all, money is a sensitive topic that may elicit strong emotional responses capable of disrupting family harmony. Proper planning and good communication can lead to a smooth, tax-efficient intergenerational transfer of your wealth whenever the time comes.

Keep in mind that children (and potentially grandchildren) who choose the family’s advisor to manage their wealth will hold separate accounts from their parents and/or grandparents; this allows these children to benefit from a wealth plan designed just for them.

Obviously, communicating estate plans can be uncomfortable given the sensitive subject matter, but doing so may offer meaningful financial and personal benefits to you and your family. It’s good to talk about your estate now instead of waiting for a time of crisis when people tend not to think clearly or logically. If you’d like some professional support, your advisor, lawyer or accountant have the relevant experience to help you hold a constructive, honest conversation that may offer you peace of mind and position your heirs well for the future.

By iA Private Wealth

This article is a general discussion of certain issues intended as general information only and should not be relied upon as tax, legal or investment advice. Please obtain independent professional advice, in the context of your particular circumstances. iA Private Wealth Inc. is a member of the Canadian Investor Protection Fund and the Canadian Investment Regulatory Organization. iA Private Wealth is a trademark and business name under which iA Private Wealth Inc. operates.