Amid economic challenges, Canadians may be feeling uncertain about the future, particularly when it comes to ensuring their families are financially protected after their passing. However, a recent survey by RBC Insurance reveals a gap between Canadians' intentions and their actions in estate planning.
The survey shows that 82% of Canadians consider it important to provide funds quickly for their families to cover funeral or other end-of-life expenses. Additionally, 76% want to minimize taxes on their estate to leave a larger inheritance, while 70% aim to pass money to their family.
Despite these priorities, only 15% of Canadians have a concrete plan for transferring their assets after death, rising slightly to 24% among current retirees.
Fewer than 40% of retirees have either set aside funds or purchased life insurance to cover final expenses. Retirees also report limited knowledge of different types of insurance policies that could help them achieve their goals.
"We often hear people say, 'I had no idea how hard it would be'," said Selene Soo, director of product management at RBC Insurance, regarding the process of managing a loved one’s assets after death. "This is followed quickly by: 'If I had known, I would have helped to prepare their finances differently.' It's hard to hear because we know there are ways to make it easier."
While over half of Canadians express a desire not to burden their families after they’re gone, many underestimate the administrative and financial weight of estate management, according to the study. This includes tasks such as closing bank accounts, paying debts, filing final tax returns, and maintaining or selling property.
Open discussions with family members and professional advisors can help alleviate these responsibilities, RBC Insurance said.
End-of-life costs can also place an unexpected financial burden on families if not properly planned for. Funds tied up in probate may leave families temporarily out-of-pocket.
However, products such as life insurance and segregated funds bypass probate when a beneficiary is named. This allows families to access funds promptly, avoid probate fees, and reduce delays in meeting financial obligations.
Naming beneficiaries can also simplify the transfer of assets and reduce uncertainty for families. This approach ensures benefits are paid directly to designated individuals, bypassing potential delays or disputes, particularly in cases involving complex family situations, business ownership, or the absence of a written will.
Regardless of age or financial status, creating an estate plan tailored to individual goals can ensure a smoother process for loved ones. Collaborating with an advisor and engaging family members in discussions can help simplify estate planning and ensure financial assets are structured to achieve legacy objectives, the report added.