Scotiatrust survey reveals gaps in wills and power of attorney documents, leaving key decisions unmade
The Scotiatrust Wills and Estate Planning Survey finds that many Canadians are unprepared for their later years.
The survey found that 41 percent of respondents do not have a power of attorney (POA) document to manage their finances or assets in case of incapacitation, and 47 percent lack a POA for personal and medical care.
Sixty-nine percent of respondents have an up-to-date will, yet among those without one, 55 percent admitted they had not created one because they had not gotten around to it. Many respondents also have not discussed important end-of-life issues with their loved ones.
Only 33 percent have spoken about where they wish to spend their final days, whether at home, in hospice, or in a hospital. Despite 77 percent preferring to remain in their own homes, 43 percent have not discussed aging in place with their children.
Less than half, or 45 percent, have shared their preference for a final resting place.
Relationship status also influences estate planning decisions. Single individuals express greater concern about aging, with 65 percent worried about their later years compared to 44 percent of couples.
Singles also show a greater tendency to discuss their plans, with 57 percent having talked about their final years with close friends or advisors.
Among them, 57 percent have both types of POAs, compared to 49 percent of couples, while only 34 percent of separated or divorced individuals have prepared both documents.
Rob McGavin, managing director at Scotiatrust, emphasized the importance of preparation.
“As we continue to live longer, and not always in great health, we could be faced with illness or incapacitation and it's imperative to be prepared and ensure your wishes are met,” he said.
He noted that having a POA guides loved ones through difficult moments when emotions run high.
Scotiatrust’s white paper, 'Unlocking Your Legacy – Empowering Canadians in Estate Planning,' highlights key aspects of estate planning beyond writing a will.
The process includes selecting executors, considering trusts, insurance, and tax strategies, and integrating philanthropy. Regularly reviewing a will and discussing plans with family members ensure clarity and minimize disputes.
The survey revealed that while 90 percent of affluent Canadians over 50 have a will, only 69 percent say it remains up to date. Furthermore, 25 percent have never sought professional advice for estate planning.
Many respondents worry about aging and financial security, with 91 percent believing their care should not burden their family and 46 percent expressing anxiety over what will happen to them in old age.
Estate execution can present significant challenges. Although 91 percent of respondents trust their executor to handle responsibilities, 63 percent recognize that the role is emotionally demanding.
Among those who have served as executors, the most commonly cited difficulties include time constraints and family conflicts. Additionally, 62 percent have appointed a spouse or child as executor, a decision that can lead to strained relationships.
Taxation plays a crucial role in estate planning. Income taxes and probate fees both impact estates. When a person dies, capital assets are generally deemed sold at fair market value, and any resulting gains are taxable. Registered accounts, such as RRSPs, are also subject to taxation.
Most provinces impose estate administration taxes on assets passing through an estate.
McGavin stressed the importance of tax-efficient strategies, such as permanent life insurance, to transfer wealth effectively.
Trusts also offer a way to control asset distribution, preventing risks associated with marital breakdowns or financial mismanagement by beneficiaries.
Many Canadians avoid estate planning discussions due to discomfort.
Mallory McGrath, founder and CEO of Viive Planning, observed, “We are a death-avoidant society. Anything associated with death or aging, we just don’t want to think or talk about it.”
However, delaying these conversations increases the risk of disputes and confusion after a person’s passing.
Glen Madore, national director of Sales and Product Strategy at Scotiatrust, emphasized, “My best advice is to make sure you communicate your estate plan to your family while you’re still here.”
Without clear discussions, estate plans may face legal challenges, causing family discord and potential litigation.
Experts suggest starting discussions by focusing on personal values and priorities. Couples should align their estate planning decisions before speaking with their family.
Procrastination increases complications, and estate plans are easier to establish when individuals are in good health. Hypothetical scenarios can make conversations more approachable.
Discussing inheritance percentages instead of fixed amounts can also ease tensions, particularly when concerns over entitlement arise. Providing context for decisions, such as variations in inheritance amounts due to financial support given during one’s lifetime, helps prevent misunderstandings.
Encouraging feedback from beneficiaries allows for greater clarity and alignment.
