“Only one-third of Canadians have an estate plan in place,” says Marie-Soleil Lemieux, president of National Bank Trust. “And just 46 per cent of adults in Canada have basic knowledge of how to organize their estate. Some people think estate planning is only for the wealthy, but there are lots of reasons that make it important for everyone.”
Those reasons include ensuring your kids under 18 will be looked after, your end-of-life wishes will be honoured and your assets are appropriately structured to minimize estate administration tax and preserve your money for your loved ones.
The importance of estate planning
Data from IG Wealth Management’s annual estate planning study shows a clear knowledge gap. Just 50 per cent of Canadian adults are aware of how a power of attorney works, only 47 per cent understand the role a will plays.
“People are unaware of the consequences of not having a will or they think they are too young to need one. Also, we don’t like to think that one day we will pass—and these are hard discussions to have,” Lemieux says.
But not planning has ramifications—both personal and financial.
“There are risks if you don’t have an estate plan,” says Melinda Olliver, senior tax and estate planner at National Bank Private Banking 1859 in Calgary. “It can create family disharmony and disagreements that can end up in court. Not working with estate planners could also mean missing opportunities to maximize the wealth you’ll be able to pass to the next generation. In a time when the younger generation is facing housing affordability challenges, this could mean they wouldn’t be able to achieve home ownership without your help.”
Olliver says the more you plan, the more likely your wishes are to be understood and respected, and the more the next generation will benefit. Being intentional about planning is an act of emotional care too, sparing loved ones the burden of too many administrative responsibilities when you’re gone.
The right time to start is now
Estate planning is highly personal and depends largely on a person’s goals and desires. But while there’s no one-size-fits-all solution, it’s never too early—or too late—to start thinking about your plans, whatever your age or life stage.
“Someone should start thinking about estate planning, at least as a thinking exercise, as soon as they start accumulating any form of wealth or they have financial responsibilities or obligations to another person,” Olliver says. “But it’s not a one-and-done discussion. Any estate plan needs to be revisited—we typically say every two to three years, but at a minimum, it should be on the occurrence of any major life event,” Olliver says.
Getting the right people on board
A proliferation of new DIY tools—books, online planners—might seem to make this task easier than in the past. But rather than navigating the complexities on your own, Olliver highlights the importance of working with the right professionals, who can help deploy personalized strategies to reduce taxes and ensure your will and assets are properly structured to deliver on your goals.
Start with an estate planner who can help you employ vehicles such as life insurance policies or trusts. A lawyer and your financial advisors will play key roles too. You’ll also need to select a party you can trust to be executor—whether that’s a loved one, a professional or even both working in tandem—to ensure your wishes are fulfilled.
“Your executor is effectively stepping into your shoes to handle your assets as though they were you—making sure tax returns are filed, dealing with your investment advisor, getting that grant of probate, and then ultimately distributing to the beneficiaries. It’s a big responsibility,” Olliver says.
Kickstarting the conversation
“If possible, the first step should be an open conversation with loved ones,” Lemieux says. “Yes, it’s an uncomfortable topic, but sometimes those conversations can crystallize what is actually important. The end result is having a family that’s much stronger and feels well prepared to respect your wishes.”