Discussing funeral arrangements and expenses can help prevent difficult conversations and reduce indecision in the future for loved ones.eyfoto/iStockPhoto / Getty Images
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Earlier this year, Heather Borrelli visited a funeral home with a client who had asked for assistance with her pre-planning arrangements. This client, a widow, will be relying on a friend to settle her estate and wanted to make sure her wishes were clear and paid for.
However, Ms. Borrelli, senior wealth advisor with Assante Capital Management Ltd. in Dorval, Que., says a client considering funeral costs proactively like this is the exception, not the rule.
“People don’t think about it unless they’re faced with something like a death in the family or [of] a friend – somebody who is close to them in age who suddenly passes away,” she says.
“I get it. It’s not something that people like to talk about. I try to do it as delicately as possible, but I look at it as part of the needs analysis for insurance planning.”
Funerals vary widely in cost based on location and individual preferences, but the average price tag across Canada is in the $8,000 to $9,000 range. Ms. Borrelli budgets for at least $5,000 if someone, such as her widowed client, has already purchased a burial plot.
She adds that encouraging clients to incorporate funeral costs into an estate and insurance plan has benefits that go well beyond the financial. The questions she asks during her discovery process lead to greater clarity around wishes – and then those wishes can be conveyed in important family conversations.
“It removes the pressure and anxiety for the surviving family when they know that they’re doing what their loved one would have wanted,” Ms. Borrelli says.
“The guilt associated with potentially not honouring your family [member] in the way they would have liked is just terrible.”
How you frame the question matters
Jordan Rausch, wealth advisor and client relationship manager with Nicola Wealth Management Ltd. in Vancouver, says many people have a “knee-jerk answer” when asked what they want their funeral to look like – something that can have a big impact on its cost. Many simply say, “I don’t care. I won’t be here.”
He’s found a different way to frame the question that puts the emphasis on those who will be there.
“How would you like your family to be able to celebrate your life?” he asks.
When clients insist they have plenty of money in their estate to cover funeral costs, he reminds them an estate becomes a complicated legal entity the moment someone dies. The money might indeed be there and emerge from the estate in due course, but he advises clients to ensure enough funds are available to pay immediate expenses, including those associated with a funeral.
Depending on a client’s situation and needs, Mr. Rausch says tax-free savings accounts and life insurance proceeds can be good solutions. A joint bank account shared with a child and money gifted before death are other options that make sense for some families.
Mr. Rausch finds that people’s attitudes toward estate planning change as the years go by. Often, when clients are younger, the focus is on mitigating tax and probate fees (where applicable) so they can leave as much as possible to beneficiaries. Then, as clients get older, the conversation shifts toward making things as easy as possible for beneficiaries – and planning for funeral costs can do just that.
“It’s a huge area that often goes overlooked … [and] the person that’s most able to address it is generally a financial advisor,” Mr. Rausch says. “So, that’s an area in which an advisor can provide a lot of value.”
It’s up to advisors to raise the topic
“We’re not going to live forever, and if we can discuss funeral arrangements and expenses today, it’s going to avoid difficult conversations and reduce indecision in the future for your loved ones,” adds Jonathan Rivard, financial advisor at Edward Jones in Toronto.
He brings up funeral costs as part of discussions he has with all clients about transferring wealth to the next generation and shares real examples of what happens with and without appropriate planning.
For example, the complexity, delays and stress when a family has to submit an invoice for funeral costs to a financial institution to withdraw from an estate account.
In general, Mr. Rivard finds that talking about an emotionally loaded topic such as death brings him closer to clients. It’s a given, he says, an advisor will talk about goals and rates of return – but those who dig deeper to explore more challenging subjects can build stronger bonds.
“My general advice to advisors is to look at a topic such as this one with a lens of curiosity,” he says. “Ask questions, be empathetic to meet clients where they are, and understand what their priorities are.”
If advisors are asking the right questions, they’re going to get insight into the client and the family,” he adds.
“Most important, that creates readiness both on the financial and the emotional side,” he says.
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