With a growing awareness and change in dialogue over the course of the pandemic, many are turning more attention to their estate plans. Here are some important considerations in protecting yourself and your loved ones.
Life can be unexpected. For so many, this saying has never resonated as strongly as it has during 2020 and 2021. With the difficult realities of the COVID-19 pandemic and the significant impacts experienced, these times have caused many Canadians of all ages to reflect on what matters most. These times have also shown the importance of being prepared to the degree that’s possible, having your affairs in order and the peace of mind that proper planning offers.
If you were to look back at mainstream media or among the general population in years and decades past, estate planning typically hasn’t been a highly covered or discussed subject. It’s not an easy topic, and understandably comes with a number of sensitivities that many have traditionally found to be difficult to think about, let alone talk about with loved ones. More recently, however, there’s been more exposure around topics such as Wills, Powers of Attorney (POAs) and planning ahead for one’s estate overall, which has created important growth in public awareness.
“Over the course of the COVID-19 pandemic, there’s been a distinct impact on awareness and a greater openness to having conversations around this area of planning,” shares Leanne Kaufman, President and CEO, RBC Royal Trust.
“Prior to these times, for many individuals and families, those conversations were often at best uncomfortable. Over the past year-and-a-half, everyone has had to face the unknown, the unexpected and the potential for their own mortality or that of a loved one. That’s an incredibly difficult thing to have to do,” Kaufman notes. “At the same time, it has really opened up the dialogue in an important and progressive way. More families are recognizing how crucial the planning is, as well as having those critical conversations with their loved ones.”
In hearing or reading the term “estate planning,” many tend to think primarily of a Will. In the administration of an estate, a Will is considered the guiding legal document. It’s where individuals express their wishes as to how property and possessions are to be distributed at death. As Kaufman notes, “Research tells us that only about half of Canadians have a valid Will, so first and foremost, it’s about making Will planning a priority. For those who do have a Will or once you have one created, it’s equally important to review it. Circumstances change consistently, and particularly in the Will, it’s not uncommon for circumstances to change in just a few years that would necessitate an update in the document. In the context of recent times, for some, there may be more cause for review.”
Note: This is not an exhaustive list. If any of the following applies to your circumstances, you should review your Will with your qualified legal advisor to determine if changes are necessary.
To find out more about preparing and reviewing your Will, please view the checklists in the Perspectives 2020 article: “Have you prepared and reviewed your Will?”
Note: An executor is called an “estate trustee” in Ontario and a “liquidator” in Quebec.
Further to having a valid and up-to-date Will, there are a number of other items that should be considered as part of a complete estate plan. Another fundamental component is a Power of Attorney (called a Mandate in Quebec), for property and for personal care.
For these documents, at the core is first giving careful and informed thought to your wishes and potential needs. Then, it’s about ensuring those details are properly documented and remain updated. “Another key aspect is to really give concerted thought as to who you’re naming as executor or attorney in your Will and Powers of Attorney,” shares Kaufman. “With these decisions, it’s about educating one’s self about what you’re asking that person to do for you — the time and effort it’s going to take and the stress it may cause. It’s also important to ensure the person you want to choose is willing to take on the role and understands what it entails.”
Often within families, there’s a common assumption that children are natural choices to act as executors or attorneys. When thinking about what that means, and how things could go off course, however, it may cause some to give pause. “With a greater awareness recently, there seems to be more engaged discussion around what the realities or experiences are in these situations, and people seem to be developing a better understanding behind the significance of these choices,” explains Kaufman.
Another important consideration is family harmony, and thinking about estate planning and related conversations from that standpoint. This is something that each person will have a unique level of comfort with and there may be a tendency to avoid the difficult discussions. As Kaufman shares, “It’s a personal choice, but I think the important thing to remember is that there are effective ways to have those advance conversations with your loved ones and set them up for a smoother transition if and when the time comes.”
Note: In drafting or updating a Will or Power of Attorney, it’s crucial to consult with qualified legal, tax and estate professionals to ensure your situation and needs have been appropriately accounted for and accurately documented.
Learn more about Wills in the Perspectives article “What’s in a Will?”
“The realities of the pandemic have also brought more specific attention to Powers of Attorney and advanced care directives, and I think that’s a really important shift,” explains Kaufman. “That awareness can be quite empowering in helping people take those steps to plan accordingly.”
Often, people tend to think of a POA only in relation to age-onset dementia or as a document that’s needed only in later life. In general, however, everyone who has an asset likely needs a POA. For any adult, if something were to happen that led to a situation of temporary or permanent incapacity, there are distinct implications of not having a POA in place.
“There’s no one who can naturally or by law step into your shoes in a situation of incapacity, and nobody who will be recognized with the authority to deal with those assets on your behalf, even a spouse,” notes Kaufman. “What that means is someone has to apply to court, which can be an arduous and time-consuming process that individuals are left to manage while at the same time handling the emotions, grief or trauma of the situation with their loved one.”
With an advance care directive, which is a legal document that provides direction for a named substitute decision maker and healthcare team, it provides the opportunity to outline your choices. “This means addressing whether or not someone wants to be on life support, or have heroic measures. Or, if you’re temporarily or permanently incapacitated, who is your substitute decision maker? These questions and aspects have been really brought to the surface over the course of the pandemic. Again here, as the awareness builds, some are more likely to take those proactive and appropriate steps to prepare for the ‘what-ifs’ in life, and there’s an important sense of assurance that can come from that,” Kaufman reinforces.
And, when it comes to the mechanics of planning, “For many, while the thought of the planning and putting the correct documentation together can seem daunting, a POA can be a fairly simple document that doesn’t take a large amount of time to put together,” explains Kaufman.
Find out more about the duties of an attorney and decision points when choosing who to name.
When thinking about retirement and later years, the majority of Canadians have a general preference to remain at home for as long as possible. In fact, according to one pre-pandemic survey, 83 percent of respondents noted they would choose staying in their home and paying for care as their top choice.¹ As a result of the pandemic and with some of the most difficult and significant impacts felt in care settings, there currently seems to be a potentially even stronger preference for aging in place.
“What living and care might look like down the road for us is something that we all need to start planning for and having conversations around,” shares Kaufman.
Depending on your stage of life, this type of planning may feel a ways down the road, but when you factor in elements like life expectancy and longevity and the costs of potential care, that may have a large impact on the choices you make in your current plans. “When it comes to care, types of care and how you envision living in retirement and later life, it’s so important to have a clear understanding of what the options are and what the associated costs are for those potential needs and wishes,” shares Kaufman.
“With many people gravitating more strongly towards living out their lives at home, it’s critical to do your research and be cognizant of the high costs of care associated with staying at home if you do require assistance. There are also elements we can’t control, such as cognitive health issues and dementia, which add further complexities and needs for care. Whatever your choices are, it’s about ensuring they’re effectively applied and accurately reflected in your plans.”
In partnership to help educate Canadians in achieving and sustaining their desired lifestyles through their retirement and later years, The National Institute on Ageing and RBC Royal Trust hosted a video event: “Your cognitive health: Symptoms, safeguards and support.”
Out of necessity, the pandemic has also caused people to expand their digital footprints, for many in a large-scale way. What this means from an estate planning standpoint is that there’s a larger impact on your estate.
Find out more about planning for your digital legacy.
“When it comes to digital assets and accounts, whether it’s for financial, e-commerce, personal purposes or otherwise, there’s a value associated with it. In much the same way as with other types of property, your digital property forms part of your estate,” explains Kaufman.
Whether it’s personal digital assets such as your digital pictures in cloud storage, or financial digital assets such as online banking, rewards points or cryptocurrencies, a key aspect is pre-planning to make sure the value of those assets is never lost or overlooked as part of an estate, as well as if and how you want to preserve some of the more personal assets.
A key aspect to think about and understand in that regard are terms and conditions on platforms you use (i.e. anything with a username and a password). “For each platform, it’s important to know that there are typically unique terms and conditions that dictate who has the authority to access it if you’re incapacitated or pass away. So it’s about looking into the process in advance to ensure the right steps are taken in planning to grant access in those situations,” explains Kaufman.
“Even something like your social media account — for those left behind, a lasting reminder of a loved one can be very difficult and emotional, and they may not be able to take the account down if pre-planning didn’t take place to grant appropriate access,” notes Kaufman.
From an executor lens, given the virtual nature of digital assets, it’s also crucial to give proactive thought to how the person acting in that role is going to find and access your assets if there’s no record of them and access hasn’t been pre-arranged.
For many, COVID and the resulting impacts have really brought to light the importance of considering all elements of estate planning and having meaningful discussions with family members and loved ones around the “what-ifs”.
“First and foremost is making sure you’re informed on different areas and elements of planning — the knowledge and the awareness can be powerful tools,” emphasizes Kaufman. “And then it’s about giving thought to your situation, needs and wishes, and that of your family, and pursuing the appropriate paths of planning. With so many uncertainties that Canadians and those all over the world have faced through these times, this really is a critical area of planning. Proper estate planning can help ensure you’re protected and it provides peace of mind for you and your family no matter what life may bring.”
For those named or acting as an executor in a Will or attorney in a POA, there are many duties and responsibilities associated with the roles. For some, it can be an overwhelming burden. Learn more about these roles and the assistance available:
Estate settlement and executor resourcesPower of Attorney resources
Find out more about RBC Royal Trust and the services and solutions offered.
This document has been prepared for use by the RBC Wealth Management member companies, RBC Dominion Securities Inc.*, RBC Phillips, Hager & North Investment Counsel Inc., RBC Global Asset Management Inc., Royal Trust Corporation of Canada and The Royal Trust Company (collectively, the “Companies”) and their affiliate, Royal Mutual Funds Inc. (RMFI). *Member – Canada Investor Protection Fund. Each of the Companies, RMFI and Royal Bank of Canada are separate corporate entities which are affiliates. “RBC advisor” refers to Private Bankers who are employees of Royal Bank of Canada and licenced representatives of RMFI, Investment Counsellors who are employees of RBC Phillips, Hager & North Investment Counsel Inc. and the private client division of RBC Global Asset Management Inc., Senior Trust Advisors and Trust Officers who are employees of The Royal Trust Company or Royal Trust Corporation of Canada, or Investment Advisors who are employees of RBC Dominion Securities Inc. In Quebec, financial planning services are provided by RMFI which is licenced as a financial services firm in that province. In the rest of Canada, financial planning services are available through RMFI, Royal Trust Corporation of Canada, The Royal Trust Company, or RBC Dominion Securities Inc. Estate and trust services are provided by Royal Trust Corporation of Canada and The Royal Trust Company. If specific products or services are not offered by one of the Companies, clients may request a referral to another RBC partner. The strategies, advice and technical content in this publication are provided for the general guidance and benefit of our clients, based on information believed to be accurate and complete, but neither the Companies, RMFI, nor Royal Bank of Canada, nor any of its affiliates nor any other person can guarantee accuracy or completeness. This publication is not intended as nor does it constitute tax or legal advice. Readers should consult a qualified legal, tax or other professional advisor when planning to implement a strategy. This will ensure that their individual circumstances have been considered properly and that action is taken on the latest available information. Interest rates, market conditions, tax rules, and other investment factors are subject to change. This information is not investment advice and should only be used in conjunction with a discussion with your RBC advisor. None of the Companies, RMFI, Royal Bank of Canada nor any of its affiliates nor any other person accepts any liability whatsoever for any direct or consequential loss arising from any use of this report or the information contained herein. In certain branch locations, one or more of the Companies may carry on business from premises shared with other Royal Bank of Canada affiliates. Notwithstanding this fact, each of the Companies is a separate business and personal information and confidential information relating to client accounts can only be disclosed to other RBC affiliates if required to service your needs, by law or with your consent. Under the RBC Code of Conduct, RBC Privacy Principles and RBC Conflict of Interest Policy confidential information may not be shared between RBC affiliates without a valid reason.
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