In this article, I’ll look at what Canadians are saying about their legacies — and how you can help clients with their estate planning.
“What kind of legacy will you leave behind? What will your children and your children’s children say about you? How will you be remembered? Will your life and decisions have inspired others to do better?”1
These questions may seem to be outside the realm of financial advice — too intense, deep and profound to ask during a meeting about their financial needs and desires. But if clients are accumulating assets without considering their legacy, answering these questions can lay the foundation for an estate and legacy plan, including intergenerational wealth transfers. When the discussions lead to potential solutions, explaining the benefits of wealth products with guarantees can provide secure, tax-efficient and dependable pathways for clients to leave their mark.
Sun Life Financial’s proprietary research shows how Canadians feel about their legacies, final wishes, transfers of wealth, inheritance expectations, wills and charitable gifts:
52% of respondents said their legacy consists of:2
- How they’re remembered.
- The impact they have on the world through their achievements.
- The financial gifts they leave for loved ones or charity.
Many survey respondents expect to leave money when they die:3
- Almost half (46%) say it is “very likely” they will leave an inheritance.
- Another 31% say it is “somewhat likely.”
- 7% say it is “somewhat unlikely,” 10% say “very unlikely” and 6% “don’t know.”
Where there’s a will, there’s a legacy way:4
- 4 in 5 (81%) say they have a will.
- But interestingly, 22% say that they “have not discussed the terms” with any of their heirs.
- Half (51%) say they’ve discussed the terms with all of their heirs.
- One quarter (27%) have talked with “some, but not all of them.”
- In the survey’s “Tips for a successful retirement,” 82% of retirees say “making a will” is important.
Most important to clients when it comes to their financial legacy:5
- 38% want to make sure that when they die, they won’t leave a financial burden on their family.
- 32% want to make sure they have access to the money they need to create memories with friends and family, or to achieve a significant accomplishment while they’re still alive.
- 22% want to leave a planned financial gift to loved ones.
- 8% want to leave a planned financial gift to a charitable organization.
You can see that clients need to discuss their legacies more and take action to make sure their final wishes are followed according to their plans. As well, the top two concerns for clients are not wanting to leave a financial burden for their loved ones when they die and wanting to create memories when they’re alive. Whether clients are concerned with one or the other, with careful planning during their accumulation years — and your help — they can leave the legacy they want.
While having a will is important for clients’ legacies, it’s equally important to ensure that clients’ money ends up in the hands of the intended recipients. Complementing life insurance with wealth products with guarantees can provide insurance benefits, such as the ability to name beneficiaries and bypass probate.
Guaranteed investment funds (GIFs)
In the getting ready for retirement stage, clients can participate in the markets, but still have protection for legacy goals. Additionally for clients in retirement, GIFs can help cover lifestyle expenses, and can provide guarantees and the potential for growth.
For example, Sun GIF Solutions – Estate Series offers:
- a 100% death benefit guarantee – the greater of the death benefit guarantee or the contract’s market value at death,
- annual automatic resets – the estate value is locked in annually if market values are higher than the previous guarantee amount, so the death benefit has nowhere to go but up, and
- control over legacy settlement – clients’ assets are distributed according to their wishes, with options to allocate money through a payout annuity.
Products such as Sun Lifetime Advantage GIF and Sun GIF Solutions – Income Series can also offer lifetime guaranteed income to help cover basic expenses, as well as a death benefit for legacy planning.
Clients can provide for a loved one or charity by watching heirs benefit from their estate. With a gift annuity, clients could gradually transfer their estate at intervals, such as birthdays or other special occasions. They could control how much income children receive and how long they’ll receive it.
Accumulation annuities – also called insurance GICs
Interest rates may be low now, with no sign of increasing anytime soon; however, some clients still want a portion of their wealth portfolio guaranteed. With insurance GICs, clients can name a beneficiary. When clients die, the death benefit from insurance GICs can bypass the estate and therefore won’t be subject to probate. The proceeds can go directly to a named beneficiary or beneficiaries. That means a hassle-free legacy to heirs, with no fees or long waits.
Clients could incorporate GICs into an estate and legacy plan with this strategy:
Laddering strategy with GICs – it’s easy and adds flexibility. Divide the amount of money the client wants to invest into 5 smaller guaranteed investments. Choose different terms and maturity dates for each of these smaller investments. The illustration below shows 5 $10,000 investments, with 1-, 2-, 3-, 4- and 5-year terms (the gold part of each bar). When the first investment matures after a year, the client re-invests that $10,000, plus the interest earned, in a 5-year term investment (the silver part of each bar), continuing the laddering process.
This strategy ensures that each year, one of the initial investments (the gold part of each bar) will mature, allowing for some liquidity in the client’s portfolio.
Research shows that many Canadians have ideas about their legacy — and questions about how to ensure they can leave a meaningful one. A good foundation for the discussion starts with showing clients how wealth products with guarantees fit into their estate plans.
Tools and resources to help you get started
- For more information about segregated fund contracts offering guarantees, the benefits of protection and potential for investment growth, visit Sun Life GIFs.
- Learn more about how to have a legacy needs conversation with clients, and earn continuing education (CE) credits, through the new Money for Life – Legacy needs course on Sun Life Financial’s Education Hub
- The bright paper Life insurance for the wealthy: the myth-busting benefits
- Money for Life – Conversation starter: Legacy needs in retirement
- Whiteboard videos: Protecting your wealth with insurance and Estate maximization
- Estate planning solutions – personal planning sheet
- Money for Life – Legacy worksheet
- What to do now: A reference guide for your executor
To learn more about estate, legacy and retirement planning strategies, contact a member of your Sun Life Wealth Sales team.
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- Build savings as one pillar of a solid retirement income plan
1 Lindsey Rietzsch, Author.
2 The information in this box is from a Sun Life Financial 2013 CARP survey of 1,700 Canadians aged 45 and over, about their legacy goals.
3 The information in this box is from the Sun Life Retirement Now Report, 2016.
4 The information in this box is from the Sun Life Retirement Now Report, 2016.
5 The information in this box is from the Sun Life Financial 2013 CARP survey.
Rocco Taglioni, Senior Vice-President, Head of Distribution, Individual Insurance and Wealth, is responsible for the overall leadership of Sun Life Financial’s distribution organizations across its Retail business in Canada. His role encompasses the leadership of the distribution company, as President Sun Life Financial Distributors Inc., as well as the Insurance and Wealth wholesaling sales organizations. Through the various leadership teams he oversees the development, direction, and execution of the Distribution strategies centered on wealth management, protection, retirement, and estate and financial planning.
Since joining Sun Life in 2004, Rocco has held various executive leadership roles, including Vice-President Business Development, Group Benefits; Head of Individual Wealth Management; Senior-Vice-President, Client Solutions; and most recently Senior Vice-President, Distribution and Marketing, Individual Insurance and Wealth. Throughout his tenure at Sun Life, Rocco has led various business strategies centered on building, transforming, and evolving organizations and teams to drive higher levels of performance and success.
Rocco has 36 years of experience in strategic leadership in the insurance and investment industries. He has served on and is a member of a number of boards. Rocco is currently President and Chair, Sun Life Financial Distributors (Canada) Inc. and is a member of the Sun Life Financial Investment Services (Canada) Inc. board. He is a member of various industry associations, including Advocis, GAMA Canada, the Canadian Pension and Benefits Institute, and the Association of Canadian Pension Management.
Rocco holds a Bachelor of Arts in Economics from York University.