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Estate Planning: New Considerations

The basics of estate planning are not new. However, to reflect the changing realities of the world around us ‒ such as increased longevity, rapidly expanding technologies, and changing family paradigms ‒ traditional approaches to estate planning need to be broadened, says the BMO Retirement Institute. In its report 'Estate Planning in the 21st Century: New Considerations in a Changing Society', specific trends – digital assets, elder care, and pets ‒ are identified as needing greater attention in estate planning, especially for the boomer generation.

Last will and testament

Digital Assets

Eight-six per cent surveyed indicated owning at least one digital asset, which includes such items as online investment accounts, virtual money (Paypal), entertainment accounts, online store accounts, and even online photo albums. Yet, there is very little estate planning precedent related to these types of assets. Because there can be very real consequences related to digital assets, planning considerations must move forward to include ensuring access to passwords for online bank, investment, and other personal accounts, as well as making provision for information related to other assets such as, for example, stock options, Internet businesses, loyalty programs, and soft copy receipts.

Thirty-six per cent of respondents indicated they have accounted for their online property in their estate plans, yet nearly two-thirds have not provided any specific instructions regarding disposition of these assets in the event of their death or incapacity. Taking an inventory of one's digital presence and including specific instructions, either formally during estate planning, or informally through providing precise details and instructions and entrusting the information to a friend or family member, not only ensures preservation of your digital financial assets, but also of your emotional assets such as photo collections or music files.

Elder Care

In 1989, 60 per cent of people aged 41 to 59 had at least one living parent; currently this number is 71 per cent. As life expectancy continues to increase, so to does the chance of becoming a caregiver to an elderly relative. Survey results indicate 18 per cent of respondents currently provide care to an aging parent (65 per cent), other relative (22 per cent), or friend (10 per cent). Care for aging parents included 53 per cent that provide both personal and financial support, 31 per cent personal support only, and 13 per cent financial support only. While 34 per cent of boomers had provisions for elder care in their estate plan, 55 per cent did not, and 39 per cent reported not including them because the probability of them outliving the boomer is small.

Estate planning considerations should address issues such as who will provide care for elderly parents and other relatives in the event of the caregiver's death or incapacity.

With the prevalence of second marriages and with changing family demographics, consideration should be given to the term beneficiary, which may potentially need to be expanded from the traditional choices of spouse, children, and grandchildren, and perhaps include parents and older relatives. After all, relatives under one's care may lose the quality of long-term care they have enjoyed in the event of the caregiver's unforeseen incapacity.

Pets As Family Members

Pet ownership is a discretionary expenditure across all income levels; however, while once considered an eccentricity reserved for Hollywood, more and more pet owners are realizing the need to make provisions for their pets. Forty-nine per cent surveyed own a pet, with 76 per cent feeling it is important to make arrangements for ongoing care. Thirty-one per cent made some kind of estate plan provision, whether formal or informal, and, of those, 38 per cent included a monetary legacy for the caregiver to cover the costs of looking after their pet. Of those who did not make arrangements, the general tendency was to assume they will outlive their pet.

Forty-six per cent of pet owners surveyed assumed a surviving family member would care for their pet. However, in reality often no one steps in to provide for the pet and it ends up at the local animal shelter. During estate planning, it becomes prudent not only to arrange for a caregiver for pets, but with the rising costs of pet care, to consider providing the funds for the pets ongoing care.

Where estate planning was once very traditional if not always straight forward, our lives and the world around us today necessitate new considerations in estate planning, particularly as it relates to technology, aging, and furry family members. In its report, Estate planning in the 21st century: New considerations in a changing society, the BMO Retirement Institute looks further into these emerging trends in estate planning and suggests ways for individuals to adapt their estate plans to reflect the new realities of a world that includes greatly enhanced longevity, rapidly evolving technologies, and an increase in the number of people seeking the companionship of a pet. The report addresses the findings on a North American basis but also includes an At-a-Glance section highlighting key findings from Canadian respondents.

Source: BMO Retirement Institute

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