Legacy Planning Ensures Support Of Loved Ones

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    Female financial consultant manager talking with a client at the bank

    By: Melissa Mihalis

    Almost 60 per cent of Canadians say they have not discussed family wealth management with their advisor, yet 96 per cent of those who did found the discussion helpful, says Angelo Parziale, director of business development at Sun Life, at its ‘Planning Your Legacy’ session.

    A financial strategy that ensures the ongoing financial support of loved ones reduces potential money loss and family conflict and can bring peace of mind for everyone involved. Legacy planning is an arrangement typically done with a financial advisor to assist in the arrangement of investments, building a financial plan, and to ensure a strong, financial legacy. Additionally, it can include personalized funeral arrangements to ensure a smooth transition for loved ones in the instance of an unexpected death. Yet, more than half of Canadians have no will or testament in place and only 35 per cent say they have one that is up-to-date, says a survey by the Angus Reid Institute. By having a plan, and being transparent with loved ones and an advisor, Canadians can confidently preserve their legacy.

    Money Talk Is Taboo

    Canadians tend to avoid life-altering conversations in fear of being uncomfortable. One in four Canadians say that discussing money is too taboo, says a survey by FP Canada. However, failure to prepare potential heirs for wealth transfers has caused 25 per cent of wealth transfers to go wrong. Of those failed transfers, 60 per cent are a direct result of poor communication and trust between testator (the person making the will), beneficiary, and bystanders.

    Not only do Canadians avoid money talk, but they avoid making any form of financial plan all together. Most frequently, they assume they’re too young to worry about their financial legacy. However, Parziale says life is unpredictable and to always prepare for the worse.

    Additionally, 23 per cent say they don’t think they have any assets to worry about, 18 per cent think it’s too expensive to get a will written, eight per cent don’t want to think about their death, and five per cent say writing a will is too time-consuming, says the Angus Reid Institute. Parziale says the consequences of these excuses can be great, resulting in conflict between family members who want to be beneficiaries, disputes on how to manage the estate, and battles on how to preserve assets for future generations. This creates confusion and chaos for everyone left behind. Additionally, there is a chance of wealth lost or capital in the hands of someone it was never intended for.

    How To Successfully Legacy Plan

    Capital can successfully be transferred in three steps, says Parziale. First, the testator should identify their legacy. This is done by considering how the testator wants to be remembered, who they wish to leave their assets too (this includes heirlooms, properties, and family businesses). From there, select individuals for the role and responsibility as an executor, power of attorney for personal care, and power of attorney for finances. In this step, funeral, memorial, or celebration wishes should be mentioned.

    The second step is to make a physical plan. This step means considering if any of your family members rely on you financially. Also, if you want to distribute your assets either equally or fair based on personal preference. Consider any business succession, heirlooms, properties, etc. The plan should include a will, trusts, power of attorney, beneficiary designations on policies/contracts, funeral arraignments, contact list of advisors, and all important documents.

    Thirdly, Parziale says to put in writing what accounts the testator has, where to find important documents, contact information the testator thinks is useful, a list on how to avoid mistakes, and a check list for everything the testator finds valuable. They should communicate their plan with family members and speak to an advisor about favoured charities, personal values, and their desired legacy.

    By creating a plan and remaining transparent with family, friends, and a financial advisor, Canadians can ensure their legacy is protected and their loved ones are cared for.

    Melissa Mihalis
    is staff writer for Private Wealth Canada,
    mmihalis@powershift.ca