Women are entering a new era as their financial power increases. They need to take a bigger role in estate planning as they live longer and need their money to last.Getty Images
Canadian women are entering a new era of increased financial power. As more assets come into their control, participation in estate planning, for many women, is a new element in their traditional role as stewards of the family’s well-being.
“Historically men have handled this, and that’s changing,” says Robyn Thompson, founder of Castlemark Wealth Management and a certified financial planner. “The Canadian women’s landscape for investing is evolving. More women are making money, they’re in the work force and they’re looking for longer term security, they invest in businesses, and their estate planning reflects their values and goals.”
Still, miseducation around estate planning and the taboos that come with discussing death and finances prove to be hurdles for women looking to set their families up for a smooth transition of wealth.
“Estate planning can be complex. With there being so many steps it can seem overwhelming,” says Moira Klein-Swormink, principal of Canada branch development at Edward Jones Investments. “Having the conversation is hard, but not having it is hard too. So, if family is important, leaving them without a clear plan isn’t aligned with your values.”
More than just a will, an estate plan includes considerations like the appointment of a decision-maker in the event of unexpected death or an illness like dementia that affects the asset holder’s cognition.
“People assume a will covers the entire gamut, but estate planning involves creating a plan with a financial adviser and a lawyer that sets out legal documents on how to manage transfer of assets to the next generation,” says Ms. Thompson.
Creating a robust financial plan for life after loss
A conversation about values is one suggestion for starting a discussion about financial legacy at home. Ms. Klein-Swormink suggests mapping out goals and challenges as a family, like how to care for a child with a disability, or how to finance health care for predictable health issues. This helps everyone agree on how to disperse the family’s resources in a way that feels thoughtful and fair.
These conversations may be more frequent as baby boomers pass on and large swaths of Canadians find themselves pulled into the estate-transfer process.
“We’re in a period known as the great wealth transfer, where we’re seeing significant transfers of money – in the trillions – going from one generation to the next. So, it’s about understanding how to ensure that those assets are transferred in a way that supports the family,” says Ms. Thompson.
In addition, Canadian women are expected to control $3.8-trillion dollars in assets by 2028 according to a CIBC report, and they have longer life expectancies than Canadian men. Combined, these trends make this a critical moment to increase women’s participation in family estate planning.
“At some point in life, women are likely to be divorced or widowed and therefore the sole custodian of finances in our families,” Ms. Thompson says. “The sooner we have control over what that looks like the sooner we can have peace of mind that if something happens tomorrow there’s a plan.”
Robyn Thompson, founder of Castlemark Wealth Management, says that with a significant wealth transfer happening, women need a strong role in estate planning to ensure their needs, and those of their overall family, are being met for the future.Supplied
Ms. Klein-Swormink says a woman’s financial influence circle, which typically consists of spouses, parents, offspring, and even friends, plays an important role in how she approaches estate planning. In addition to bequeathing to these groups, Ms. Klein-Swormink says many women are also incorporating charitable donations into the plans for their legacies.
“After asking how they can leave their families a legacy that will allow them to live out their dreams, many women today are looking for purpose-driven alignments for wealth.”
Jessica Morehouse, a millennial financial counsellor, says she’s had an uptick in questions from millennial investors as they set their sights on family planning, home purchases, and strategies for more savvy investing for the first time. When it comes to estate planning, she says millennials often wonder if it’s something they need to do at all.
“I think there is a big misconception that you either need to be wealthy in order for an estate plan to be useful, or that it’s expensive to set up an estate plan,” Ms. Morehouse explains. “But the truth is, everyone needs an estate plan no matter how many or few assets they have, and you can make a will very inexpensively with the variety of online will kits that exist today.”
Whether getting started with a team of advisers or bootstrapping with independent research, Ms. Thompson recommends revising the family’s estate planning after every major life event.
“If there’s been a divorce, a birth, or any material change, it warrants a conversation about estate planning because it likely changes your life. So, sometimes the conversation starter can come from things that you’re seeing around you.”
The worst-case scenario is a family member dying without an estate plan. Without a plan, families may lose control over assets earned by their deceased loved one.
“Dying without a will means the government makes those decisions,” says Ms. Thompson.
“Sometimes [without an estate plan] there’s infighting that can tear families apart when they’re trying to determine what your wishes would have been when you’re not here. Ultimately, estate planning is about looking at the whole family and asking how you’re going to protect each other.”