Professional advice is a good starting point

Traditional estate planning has typically involved clients and their lawyer who drafted the will. It has been an operation shrouded in secrecy. Often, this is because clients don’t want to start an emotionally charged conversation with family members, they aren’t accustomed to discussing money or both! But changing family dynamics and, in some cases, previous experience with estate administration are causing a shift to more open communication about estate planning, with family members, professional advisors and charities receiving a bequest.

Engaging in meaningful conversations about estate planning with family members has multiple advantages. It is important that family members understand the different roles and responsibilities that come with estate planning. For example, if named as an executor, family members should be willing and capable of fulfilling the responsibilities, which can include planning a funeral, distribution of assets and filing tax returns. Executors also need to know where important documents are located, contacts to be notified and be aware of any special requests. In the digital age, executors can also be responsible for dealing with the deceased person’s digital footprint. Having a Power of Attorney (POA) for property and/or personal care are other examples of important roles in estate planning. Lastly, family members who have a comprehensive understanding of the estate plan are less likely to be surprised by the outcome. For example, a conversation about why a charity is named in the will can lead to a conversation about family values.

As an alternative to naming family members as executors, many professional advisors offer this service to their clients. Executors (whether family members or professional advisors) are typically paid between three to five percent of the value of the assets in the estate. As the coordinator of your estate plan, a professional advisor can take some of the pressure off family members during a difficult time. Consider this a team-based approach to estate planning with the advisor serving as the coach and family members, other advisors and charity representatives as teammates. As in any team sport, the coach needs to see the big picture and communicate with team members. For example, a professional advisor can explain to family members the tax advantages of making a bequest as part of estate planning to minimize the estate tax payable after death.

An often-overlooked element of estate planning is communication with charities. This is often due to a fear of setting high expectations or getting inundated with additional solicitations. However, there are very practical reasons for advising charities if they are part of an estate plan. Firstly, charity representatives can ensure the conditions of the bequest are appropriate and broad enough to allow for flexibility in the event of organizational change. Secondly, it helps charities to understand how the client/donor would like to be recognized once the bequest is realized. Thirdly, charities may want to celebrate their “planned giving” donors by recognizing them in the present, thereby encouraging others to make a bequest.

Despite the topic, open communication about estate planning can be a very meaningful experience that enriches family relationships and creates a legacy for future generations. There are several resources available for guiding these conversations and a professional advisor is usually a good starting point.

Arundel Gibson is a professional advisor who supports families across Canada to be intentional about their philanthropy and impact.

The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.