Clients can have difficulty realizing the scope of what’s needed to complete a proper estate plan.Wiroj Sidhisoradej/iStockPhoto / Getty Images
The COVID-19 pandemic has caused many Canadians to face their own mortality – and the need to plan financially for worst-case scenarios. That has opened the door for financial advisors to engage with their clients about creating or updating their wills and powers of attorney.
“I’ve reached out to some clients to ask if they’re ready to put some plans in place, and some clients have called me to say they are,” says Léony deGraaf Hastings, an advisor at deGraaf Financial Strategies in Burlington, Ont.
While lawyers draft the actual estate documents, an advisor’s advantage is helping clients review or decide their final intentions because advisors spend more time uncovering their clients’ personal and financial details than lawyers do, says Rhonda Sherwood, an advisor at Raymond James Ltd. in Vancouver.
“We have the financial background to give advice on how best to invest or structure some financial instruments in ways to benefit their estate and beneficiaries,” Ms. Sherwood says. “We can help them understand what their estate would look like at different points in their lives and how that may affect their beneficiaries.”
Advisors also know what questions to ask to encourage thought-provoking discussions, says David Christianson, a portfolio manager and senior vice-president with at Christianson Wealth Advisors with National Bank Financial Ltd., in Winnipeg. “It’s our job to help get issues out on the table and address them, [such as] how do they want their assets distributed and how much income do they want to leave their family.”
Mr. Christianson’s overall estate-planning review includes checking all of a client’s assets and liabilities, looking at registered plans, pension plans, beneficiary designations on investments and life insurance policies. After a life insurance needs analysis, he’ll advise whether there are enough assets in the estate to provide the desired financial support to the surviving family. He’ll also discuss with clients the possibility of contingent beneficiaries in case the first person designated as such passes away.
Before estate documents are drafted, Mr. Christianson will speak to the client’s lawyer ahead of time and send the client’s financial information to the estate professional, along with estate recommendations he made with the clients’ approval.
“So, it’s not totally separate silos between advisor and estate lawyer,” he says. “When you have that open communication, the end product ends up being much higher quality.”
Clients can have difficulty realizing the scope of what’s needed to complete a proper estate plan. So, Ms. deGraaf Hastings hands her clients an estate-planning booklet in which they can record all their information such as bank and investment accounts, online passwords, trusted contacts and general funeral wishes.
“It brings into focus the amount of information their executor will need,” she says. “It can be motivating to put their affairs in order.”
But it’s not always a straightforward process. Ms. deGraaf Hastings says that sometimes with senior clients, family dysfunction derails this planning, leading to delay and indecisiveness. For example, a client could be worried about a special needs child or a possible beneficiary who has an addiction problem or spendthrift tendencies, she says.
Thus, the senior may want to appoint one child as power of attorney or executor instead of all children, a move that they believe will cause friction among family members, she adds.
That’s why Ms. deGraaf Hastings encourages having family meetings to get all the issues on the table. When clients ultimately make their estate-planning decisions, she has moderated estate meetings specifically for the client’s family, executor and any other beneficiaries. At the meeting, she would explain the client’s estate wishes directly with the beneficiaries and explain why certain decisions were made.
“[Family meetings] work because everyone feels that they’re on the same page,” Ms. deGraaf Hastings says. “Everyone feels that they’ve been addressed equally and received the information at the same time. It’s a great way to bring everyone up to speed without one family member being advantaged or disadvantaged over the other.”
For some, estate planning goes beyond family members but also leaving a philanthropic legacy. Mr. Christianson has some affluent clients who still need to flesh out details about giving more to charitable organizations.
“They’re now in a situation in which their kids are financially independent and they want to talk more about their permanent legacy and how they could be more philanthropic,” he says. “I help them to understand that they can afford to do this, and develop tax-effective and low-cost ways of giving money to charity.”
Ultimately, the goal for advisors is to help solve any issues hindering a client’s ability to get estate plans completed. Just more than half of Canadians don’t have a will in place, according to Angus Reid Institute, and as Ms. deGraaf Hastings puts it, taking the stop to do so is “the best $500 they’ll ever spend for peace of mind.”