How advisors can help Canadians prepare for dementia
On the weekend of May 25th, Canadians coast-to-coast came to together to raise millions of dollars for those impacted by dementia through the IG Wealth Management Walk for Alzheimer’s.
Initiatives such as this will take on an added importance given that Canada is on the cusp of a dementia epidemic. Today, more than 650,000 Canadians are living with this disease and that number is forecasted to reach nearly one million by 2030, according to the Alzheimer’s Society of Canada. As our population ages, the prevalence of dementia will only continue its staggering rise.
While the health implications of this disease are widely recognized, its financial implications are less understood. However, we shouldn’t underestimate its enormous financial toll. Cognitive impairment can affect clear decision-making, which may jeopardize one’s financial affairs.
Through an individualized and integrated estate plan, financial advisors can help Canadians protect and guide the distribution of their assets and wealth in a tax-efficient manner. But before building an estate plan, advisors must first build knowledge. A recent study conducted by IG Wealth Management found that only one-third of Canadians have an estate plan in place and less than half are familiar with many of its critical components, including powers of attorney, wills, insurance and tax implications. Financial advisors can take the guesswork out of the future by bridging the knowledge gap around estate planning and helping clients preserve their wealth according to their wishes.
While the creation of an estate plan is well and good, it’s only the first step. Advisors must encourage clients to review their plans every three to five years, or when significant life events occur. Importantly, a plan should also be re-examined any time provincial changes to estate legislation are announced. A common misstep is assuming that lawyers communicate legislative changes to their clients, but financial advisors should also be generally aware of upcoming legislative changes to ensure their clients’ estate plans are still up to date. Through a comprehensive and current estate plan, financial advisors can play a pivotal role in helping clients maintain control over their finances and health care in the event of cognitive decline or death.
The financial implications associated with dementia and other forms of cognitive decline can be overwhelming. But there are a series of available tax credits to help ease the financial toll of the disease. The Canada caregiver credit is a non-refundable tax credit that helps caregivers support a spouse or common-law partner, or a dependent with a physical or mental impairment. The disability tax credit is a non-refundable tax credit to help lessen the amount of income tax paid by individuals with severe or prolonged physical or mental impairments. Also available are the Home Accessibility Tax Credit and the more recent Multigenerational Home Renovation Tax Credit to help with the cost of renovating a home to establish a secondary unit that enables a qualifying individual to live with a qualifying family member. An advisor can clarify and optimize these credits to help those affected by dementia or other forms of cognitive decline keep more money in their pockets.
We can’t underestimate the role financial advisors can play in helping Canadians prepare for and navigate the financial complexities of Alzheimer’s disease and other forms of dementia. As an industry, we have a responsibility to do so.
Damon Murchison is president and chief executive officer at Winnipeg-based IG Wealth Management.
