Wills and trusts – virtually all estate matters really – can be difficult for financial advisors and their clients if they don’t prepare ahead of time, an estate planning professional told a recent conference. 

John Natale, the head of Tax, Retirement & Estate Planning Services, Wealth, at Manulife, told a session of the Independent Financial Brokers of Canada (IFB) conference in mid-October that financial advisors are in one of the best positions possible to ensure will and estate issues are dealt with quickly and cleanly. 

“The key differentiator, I believe, is planning and the value and the benefits it can provide your clients to make sure that the assets they’ve worked hard to accumulate are distributed to the people who they want it to go to, in the manner they want them to be distributed and in a tax-efficient and timely way,” said Natale. 

$1 trillion wealth transfer 

The issue has become more important than ever before because of the estimated $1 trillion in wealth transfer said to be expected over the next decade. 

As it now stands, estate issues can change depending on a number of issues, including the province. Next year in Ontario, for example, marriage will no longer automatically revoke a will, he said.

Natale told the advisors that changes in beneficiaries when it pertains to a life insurance policy should be made to the insurance company directly. 

“It’s critical if you make a beneficiary designation outside of the life insurance company’s forms to notify the insurance company so their records are up to date and the money goes to the right person.”

He noted that it’s always important to name someone in trust for a minor beneficiary and in some provinces a surviving parent must make an application to court stating why that parent should manage the money. “This all takes time and money and can be easily avoided through proper planning.” 

Legal costs 

Often, major problems can be averted if the client holds a family meeting where the person who has the will explains to everyone why he or she is making certain designations. Otherwise, a big chunk of the estate can be eaten up by legal costs. 

There have been a number of public cases that show the unfortunate situations that can take place when someone who thought they would be a beneficiary didn’t get anything in the will. In the end many take the issue to court. 

Some of the worst situations deal with members of the rich and famous. Some of the bigger-name Canadian cases that have gone to court include the estate of late Toronto philanthropist Honey Sherman, who died without a will, as did Toller Cranston, a bronze medal winner and accomplished artist. Renata Ford, the widow of former Toronto mayor Rob Ford, was ordered to pay nearly $300,000 in legal fees for work done on his estate. American singer and songwriter Aretha Franklin had multiple wills; the issue went to court, and in the end, 45 per cent of the revenues of her estate now go to pay off her tax liability.

Major life events 

Natale told advisors not to assume their clients have a will or if it’s up to date. For those who have a will, it’s important to ask clients to check them periodically, especially if there is a major life event and the beneficiary designations need to be changed.

“Put yourself in the centre of your client’s estate plans. You folks are in the best position to help your clients and you can avoid some of these disasters.” 

And when you are talking to your clients, make sure you plan to make any salient points to both members of a couple.

“Women are as smart as men about money. They may just not have had the opportunities to learn and deal with finances,” said Dr. Amy D’Aprix, founder of Toronto-based Life Transitions. “It’s really important not to treat women as an extension of their husband.” 

Sometimes she said, advisors, either knowingly or unknowingly, make eye contact only with the husband when putting together future estate plans even though both the husband and wife are present at an advisor meeting.

“Engage women clients by building relationships that link her values, her goals and her priorities to her money. If you do this, you will become a referral magnet.”