Clients need help discussing inheritances

A majority of Canadians expect to leave assets upon death, but when it comes to having conversations about transferring that wealth, many say they haven’t discussed it with their families or financial advisors, finds a CIBC poll.

• 51% of Canadians expect to transfer wealth, but almost half (47%) have not discussed the inheritance with the recipients

Read: What happens to inheritances in a bankruptcy

• 79% have not discussed the financial and tax implications of an inheritance with a financial advisor

The report identifies key areas where there may be conflict within families who don’t communicate about wealth transfer:

• Transfer of the family cottage: Parents may expect the cottage to be used for many generations, but their children may feel differently. This could result in lost planning opportunities for the property while the parents are alive.
• Inheritance: Parents who want to protect their wealth for their children or grandchildren through the use of trusts may be concerned that their children could perceive it as not trusting their judgement.

Read: How to give money to grandchildren

• Charitable gifting: Parents may look to reduce taxes at death through charitable gifting, but their children may not agree with or understand the benefits.
• Probate: Parents may want to make children joint on investment or bank accounts to avoid probate, but may not realize it could potentially cause conflict among the children and limits estate planning strategies.

Here are some conversation starters as you help clients begin the estate planning process:

• Discuss with your spouse or partner how you want your wealth to benefit the people you care about. What are your values? What are your goals? Are there areas where you disagree?
• Think about who in your life may require special financial considerations, such as someone with a disability.
• Complete an inventory of your estate, itemizing assets such as your house, cottage, car, investments, and insurance.
• Communicate your plans to your family and engage their feedback. Ensure your family has been introduced to your advisory team before difficult times arise.

Read: Prepare your clients with these inheritance horror stories

Staff

The staff of Advisor.ca have been covering news for financial advisors since 1998.