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An estate plan is the best gift you can give your loved ones

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This article was published 12/06/2023 (902 days ago), so information in it may no longer be current.

Christine Van Cauwenberghe, Head of Financial Planning at IG Wealth Management, recalls one unfortunate example of how costly the lack of an estate plan can be.

“A family member became quite ill,” says Van Cauwenberghe, who did not disclose the individual’s name. “She went into an assisted-living situation to receive care. No one had power of attorney on her estate and there was a family home that was left empty and unattended.”

Other family members were unaware that they needed to look after the vacated home, believing someone else was taking care of it.

“When family members become ill, their caretaking needs can become all-consuming. It can take years before the family has a chance to see to all the financial affairs if a proper plan is not in place,” Van Cauwenberghe says. “So, in this case, by the time the family got around to selling the property, it was worth significantly less due to its abandoned nature than if it had been upkept before it was sold.”

According to a study conducted by IG Wealth Management, only one-quarter of Canadians have an estate plan and one-third do not update their wills when experiencing a major life change. Further, just 24 per cent have a plan in place for financial expenses should they be impacted by Alzheimer’s disease or another form of dementia.

An estate plan is an essential part of one’s financial picture as it outlines financial wishes and asset distribution in the event of death or cognitive decline.

“We wanted to take the temperature of Canadians to see if they were concerned about financial planning later in life,” Van Cauwenberghe says of the study. “It was a little disappointing to learn that so few Canadians had an estate plan – though I see an important opportunity for education to help Canadians financially prepare for their later years.”

But she recognizes why people have put off addressing the issue.

“Understandably, it can be uncomfortable to think about death and disability, and it’s never urgent especially when other day-to-day finances and family responsibilities take priority,” Van Cauwenberghe explains. “But having an estate plan that addresses your wishes in the event of unforeseen circumstances is the best thing you can do to take care of your family.”

Many underestimate the costs associated with neurological conditions like Alzheimer’s disease and other forms of dementia. “It can be financially crippling for those directly impacted, as well as their families and caregivers. Given Canada’s aging population and the widespread nature of dementia, it is important to account for the possibility of some sort of cognitive impairment within your estate plan to reduce financial risk – and hardship.”

Dementia is a progressive disease, so you don’t lose your decision-making capacity overnight. As such, it’s important to be proactive and put a plan in place while you still have cognitive capacity. Once complete, you should speak with those impacted by your plan, including your designated power of attorney or financial planner, and provide instructions for them to act on your behalf to carry out your wishes in the way you intended.

Working with a financial advisor to build an estate plan early on will ultimately be more cost-efficient down the line and will save your loved ones from unexpected and lofty legal fees.

Don’t let diminished cognitive function negatively impact your financial health. It’s never too early to work with a financial advisor to develop an estate plan that will protect and guide the distribution of your assets and wealth when the time comes.

Speak to an IG Wealth Management advisor for estate planning and other financial planning advice: Find an Advisor | IG Wealth Management