Avoid legal battles with enhanced estate planning

By Staff | July 31, 2013 | Last updated on July 31, 2013
3 min read

Canadians need to move beyond traditional estate planning, according to a report from the BMO Wealth Institute.

While traditional estate planning typically focuses on estate administration, tax considerations and having the proper legal documents in place, the report calls on Canadians to consider enhanced estate planning – including having conversations early on – to address the emotional impact on those left behind and alleviate family strife.

Read: Daughter wins estate battle, still can’t enter property

According to the report, What are you leaving behind: Family conflict or a memorable legacy? more than half (54%) of Canadians believe the potential for conflict among family members after the death of a loved one represents the most serious drawback of not having early and ongoing estate planning conversations.

Other issues identified with putting off having such discussions include:

  • Unpleasant surprises after death of a loved one (42%)
  • Legal complications (37%)
  • Financial/taxation issues (33%)
  • Administrative complications (22%)

Fortunately, many Canadian families are seeing the value in talking openly about estate planning and legacy goals. According to the report:

  • 82% of Canadians with a child at least 40 years of age have had at least one conversation with their adult child about their legacy goals and estate plans.
  • 64% of adult children with parents who are at least 60 years of age have had at least one conversation with their parents. However, only about one-third characterised these conversations as “detailed.”

Read: Handle U.S. estate tax exposure

“Telling a child that a will and power of attorney have been prepared, and maybe even letting them know some of the plans for managing and distributing assets, is a good start; but it’s not a detailed discussion,” says Chris Buttigieg, senior manager, Wealth Planning Strategy, BMO Financial Group.

It’s important for clients to “have comprehensive estate planning conversations prior to going to lawyers and accountants to gain an understanding of what’s important to [their] heirs. Though they may not necessarily agree on everything, the conversations will provide information to build a more robust estate plan with fewer potential surprises. This, in turn, will help to create a legacy that loved ones will remember fondly,” he adds.

4 essential estate planning steps

Meet as a family: By sharing the thoughts, wishes and goals to be achieved by an estate plan, it is possible to give beneficiaries an understanding of the intentions on which the plan is based.

Establish or update will and powers of attorney: When changes are significant, the will may not provide for the distribution originally intended. Not only might assets no longer be available, but intended beneficiaries may have predeceased, new potential beneficiaries may have been born (such as grandchildren) or changes in family circumstances (such as divorces) may not have been considered. Powers of attorney should also be kept up-to-date. If an attorney moves far away or is no longer available, the power of attorney may be unusable.

Get insured: Insurance provides a financial safety net for loved ones and can be used to replace earned income that is no longer provided. It also provides liquidity to pay off debts or pay for final expenses and taxes.

Appoint an executor: Consider appointing a corporate executor to administer the estate, especially if there are concerns regarding the significant investment of time required and the high level of knowledge required to perform the role effectively, or if there are concerns about being at the centre of family conflicts.

Read: Leaving money to an unborn heir

Advisor.ca staff


The staff of Advisor.ca have been covering news for financial advisors since 1998.