(Runtime: 5:00. Read the audio transcript.)
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Among the many facets of modern estate planning, few are as important as ensuring that a clear and legal will has been prepared to direct client assets at the time of death, says Wilmot George of Canada Life.
Speaking on the Soundbites podcast, the managing director of tax and estate planning said a top priority for wealth managers should be to prevent their clients from dying intestate.
“Financial advisors are well advised to have the estate planning conversation with their clients,” he said. “It’s not typically the conversation at the forefront of people’s minds when they sit down to discuss their wealth [but] step one, quite often, is to ensure that their clients have a will.”
George described wills as the cornerstone of any estate plan. And while Canadians profess to understand the importance of a will, they seem to be fuzzy on the potential consequences of dying intestate.
“According to a survey done by the National Institute on Ageing in 2023, 91% of Canadians think wills are an important component of an estate plan,” he said. “Yet in the same survey, 16% of Canadians indicated that there are no consequences, or they don’t know the implications of not having a will.”
Indeed, he said, intestacy can have undesired consequences like delays, added fees, frustration and conflict among family members.
The tax implications alone can be serious, he said.
“It’s important for Canadians to understand that when they pass away, they’re deemed to have sold their assets just prior to death, which can lead to a large taxable income for the year of death, and taxation at top tax rates,” he said. “As a part of any financial plan, not only should we be thinking about rates of return, not only should we be thinking about how to maximize our assets in retirement, we should think about estate planning as well to ensure that we protect and preserve those assets when the time comes to distribute those assets to beneficiaries.”
George pointed out that in an era where there is downward pressure on financial management fees, estate planning gives financial advisors the opportunity to demonstrate their value.
“The estate planning process allows us to chip away at that unsettling feeling that we typically have when our affairs are not in order, to bring peace of mind for both the person with the plan and family members who might inherit,” he said.
“Financial advisors who are well positioned to service this market will do their client families tremendous value. And in doing so, referrals and retained business across generations will often be the result.”
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This article is part of the Soundbites program, sponsored by Canada Life. The article was written without sponsor input.
This article is part of the Soundbites program, sponsored by Canada Life.
The article was written without sponsor input.