A historic wealth transfer is underway, but many Canadians aren’t ready.
Canadians are currently experiencing the largest intergenerational wealth transfer in our country’s history. However, more than half are entering this transition without a plan. A recent IG Wealth Management study found that more than half lack an estate plan, leaving their final wishes and loved ones vulnerable.
“It’s concerning that so many are unprepared for their future,” said Christine Van Cauwenberghe, head of financial planning at IG Wealth Management.
“A properly constructed estate plan can help ensure that you’re prepared for your passing and that your wealth is distributed according to your wishes in a tax-efficient manner. This is especially critical as we navigate the greatest wealth transfer in Canadian history.”
To ensure that your wishes are carried out as you intended, including components such as a will and health care directive, as well as naming beneficiaries, purchasing life insurance and designating a power of attorney in your estate plan is crucial.
Estate planning: necessary for all
One of the most common misconceptions is that estate planning is for the wealthy or those with families. It’s really about ensuring that your wishes are respected and your loved ones are protected, regardless of how much wealth you have accumulated.
The study also found that many Canadians are unfamiliar with key aspects related to estate planning. About half say they aren’t knowledgeable about tax considerations, the benefits of having life insurance and the consequences of not having a will or power of attorney.
“Estate planning isn’t just about transferring wealth and assets,” explained Van Cauwenberghe. “It’s also about protecting your legacy, ensuring your final wishes are carried out in the manner you intended and making life easier for your loved ones.”
Planning for the unexpected: impacts of cognitive decline
Estate planning also plays an important role in preparing for unexpected health implications that can lead to cognitive decline. Neurological conditions like Alzheimer’s disease can affect one’s ability to make decisions about their finances and lead to significant care costs.
However, the study found that just a quarter of Canadians have planned for any possible cognitive decline-related expenses that may occur in their lifetime.
Further, should cognitive decline occur, only one-third of people have made plans for what will happen to their assets and just under 40 percent have made plans for who will manage their finances.
“Anyone can be impacted by cognitive decline throughout their lifetime and too many underestimate the costs,” emphasized Van Cauwenberghe. “Our advisors help Canadians plan for the unknown to help minimize financial risk and hardship.”
Take steps today
To learn more about estate planning, listen to a special edition of IG Wealth Management’s The Living Market podcast hosted by Aurèle Courcelles, Vice-President, Tax & Estate Planning at IG Wealth Management with Dan Britton, Assistant Vice-President, Tax & Estate Planning at IG Wealth Management: The Living Market Podcast | IG Wealth Management.
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.
Insurance products and services distributed through I.G. Insurance Services Inc. (in Québec, a Financial Services Firm). Insurance license sponsored by The Canada Life Assurance Company (outside of Québec).
