There’s no doubt that Canadians are generous when it comes to leaving money to their children in their will. By 2026, around $1 trillion is expected to pass from Canadian baby boomers to their children. However, while 80% of Canadians intend to leave an inheritance, less than half of Canadians have discussed their plans with their kids.
This can lead to considerable problems, one of them being the tax implications. While inherited money and assets might not be taxable, some assets, such as second homes, RRSPs and businesses, are typically taxable to the deceased person’s estate (in situations where those assets are not “rolled over” to the spouse). Those taxes in turn can prevent an inheritance from being as fair as intended.
Not discussing the contents of your will can lead to disputes among your kids and the will being contested. It can also be less tax efficient than if it had been discussed with your children and your financial advisor.
For the adult children in line to receive an inheritance, knowing roughly what they can expect to receive (if anything) when their parents die should be an essential part of their own retirement plan. If you over- or underestimate your inheritance, this could have a significant impact on when you can retire and/or the quality of your lifestyle in retirement.
Let’s look at the reasons behind the reluctance to discuss estate planning and how you can overcome them to start those difficult conversations.
Understanding your parents’ reluctance
Many people hesitate to discuss their will and estate planning for a variety of reasons, including:
- Fear of mortality: talking about estate planning often brings up the topic of death, which can be upsetting.
- Privacy concerns: some parents may want to keep their financial details private, even from their children.
- Concerns about family conflicts: there may be worries that discussing estate planning could lead to disagreements among family members.
- Lack of understanding: many people don’t fully grasp the importance of estate planning or how to go about it.
Once you understand these concerns, it can be easier to begin an open and productive discussion.
Persuading your parents to have the estate planning conversation
Your parents might need persuading that they even need to have a conversation about their estate plan. Let them know that, without this discussion, several major issues could arise, including the following:
- Without a will, intestate legislation is followed to determine who will inherit the deceased’s assets (rather than following the deceased’s wishes).
- Not choosing a power of attorney could bring about serious problems or disagreements if the parent becomes incapable of making their own financial and health decisions.
- Without a defined estate plan, there could be prolonged legal battles and increased legal fees.
- The uncertainty and potential conflicts can take a significant emotional toll on family members.
- Settling an estate without a plan can be costly because of legal fees, court costs, potential tax penalties and avoidable liabilities.
Preparing for the conversation
These steps can help ensure that you have the smoothest and most productive discussion possible:
- Learn about the different aspects of an estate plan, beyond a will, including powers of attorney, advanced directives and tax-saving strategies.
- Choose a comfortable setting, where everyone can speak privately and openly.
- Pick a stress-free time, when everyone is relaxed and not preoccupied with other pressing matters.
Starting the conversation
When you sit down with your parents, start by:
- Explaining why you're having this conversation and the benefits it will bring for you and them.
- Acknowledge that this is a difficult topic and show empathy towards them.
- Emphasize how estate planning will help ensure their wishes are respected and their legacy is protected.
What you should discuss
While you may not cover all of these topics in the first conversation, these are helpful starting points:
- Discuss the importance of having a will, how to make it fair, what to include and who the beneficiaries will be.
- Explain why having a power of attorney is so important for financial and property matters, as well as for healthcare decisions. Talk about their preferences for future health care and end-of-life care.
- Discuss where to find details of bank accounts and assets, such as stocks, mutual funds and insurance policies.
- Make sure you’re able to access and manage their online financial accounts.
Maintain an open dialogue
The first conversation is just the beginning. To ensure that the estate planning process goes smoothly, follow these suggestions:
- Schedule regular check-ins to ensure the estate plan is progressing and to address any potential concerns that might subsequently arise.
- Involve your IG Advisor to provide professional guidance and ensure all aspects of estate planning are covered.
- Create a folder to store all estate planning documents and information about digital accounts for easy access.
How to deal with objections
Your parents may have reservations about the estate planning process and sharing personal financial information with you. These tips can help you them feel more comfortable with the process:
- Listen to and understand their specific concerns; address them with patience and empathy.
- Approach the conversation with a supportive and non-confrontational attitude.
- Clearly communicate how estate planning benefits them and their family.
- Be patient and respect the pace they’re comfortable moving at.
Get help starting the estate planning conversation
You don't have to navigate this alone. Your IG Advisor can help you:
- Develop a strategy to approach the subject and organize the conversations.
- Ensure that all important aspects of estate planning are discussed.
- Consider the strategies and financial options available to you that can make the estate plan more robust, tax efficient and fair.
Talk to your IG Advisor today to set up a meeting about starting your own estate planning conversation. If you don't have an IG Advisor, you can find one here.
Written and published by IG Wealth Management as a general source of information only. Not intended as a solicitation to buy or sell specific investments, or to provide tax, legal or investment advice. Seek advice on your specific circumstances from an IG Wealth Management Advisor.
