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Advisor SunLife

Easing the final farewell

Detailed planning with a well-rounded team can help reduce the emotional and financial cost of settling the estate


Date: August 30, 2017

Death is inevitable. There's no secret there.

But despite the fact that death is an irrefutable part of life, clients often underestimate the need to plan for their final wishes.

That's why advisors can, and should, play a central role in helping clients with the estate and legacy planning process, says Mike Banham, vice-president of wealth distribution at Sun Life Financial.

"Planning ahead of time and seeking professional estate planning advice can help reduce both financial and emotional costs [for clients]," says Mr. Banham. "A plan increases the likelihood that estate or legacy wishes actually happen; a plan ensures it's not left to chance."

The emotional toll on family can be profound when a loved one dies, and a thoughtful estate plan can help bring a family closer together while making the grieving process less stressful, says lawyer Anita Southall, with Fillmore Riley LLP in Winnipeg.

Stress can be one of the major emotional costs of estate settlement, especially if an estate has not been well-planned. Families need to go through the grieving process and mourn their loss. This is not a good time to sift through their loved one's financial statements or worry about the logistics of how they're going to pay for the funeral arrangements or other financial obligations. Quarrels can erupt between family members over how assets are to be distributed. As well, loved ones can make poor decisions while going through the stress of grieving.

In addition, family members can encounter frustrating delays - the process of settling an estate takes an average of 12-18 months, with more complicated estates taking more time than simpler estates.

"Good planning creates the structure for ease and speed of implementation of an estate," says Ms. Southall. In contrast, "poorly drafted or self-drafted wills can lead to greater expenses, a delay in completion and often to mistrust and heightened emotions."

In fact, the more detailed the will, the better. For example, if a client wishes to leave money to the children's wing at a particular hospital, this kind of detail should be included to ensure the client's specific wishes can be fulfilled.

A proper plan requires specialized advice that is best provided by a team of professionals, including lawyers, accountants and estate planning experts, says Mr. Banham. By enlisting the help of a well-rounded team during the estate-planning process, clients can save time and money during settlement.

Advisors have the opportunity to act as the quarterback of an estate-planning team, coordinating the input of other professionals, notes Mr. Banham.

"Another way to alleviate stress is to include the client's family in discussions with the advisor or advisory team during the planning process," he adds. "This will help establish connections, transparency and trust in the process and the people."

Patrick O'Connor, a trust and estate practitioner with Blackwood Family Enterprises in Winnipeg, agrees that involving family during the planning process can prove very important during the settlement of the estate.

"Planning with family versus planning for family always produces a better outcome," says Mr. O'Connor.

This familiarity enables advisors to provide beneficial guidance during the grieving process, including encouraging family members not to rush to decisions regarding the estate.

Another important role for financial advisors is addressing concerns about probate - the legal process where a will is proved in a court and accepted as a valid document. Fees vary from province to province and can range anywhere from $100 to over $25,000 to settle a million-dollar estate, says Mr. Banham.

On top of the financial cost, invasion of privacy can be an emotionally challenging aspect of probate. If the estate is probated, anyone can access the court file to view the will. For many Canadians, money is a private issue - how much we earn, how much we owe, how much of a nest egg we have. This desire for privacy can extend to estate planning for families. For example, questions about how much one sibling is receiving over another or how much an estate is worth can result in family disagreements or even embarrassment if they become public knowledge.

"By planning ahead and including investments like segregated fund contracts as part of an estate plan, families and beneficiaries can avoid the public probate process on these assets," says Mr. Banham. Through the use of insurance-based wealth products, private family matters can stay private family matters.

In fact, segregated fund contracts offer a number of benefits when settling an estate. As insurance contracts, they offer the option of naming a beneficiary so the funds can bypass the estate, saving money on probate and other fees. Because insurance benefits are tax-free, they can provide liquidity within the estate to pay taxes on non-sheltered assets, like a family cottage or registered retirement accounts. Segregated fund contracts can also offer investment protection, with beneficiaries receiving the guaranteed amount or the market value, whichever is greater.

"It's important to plan for the estate and include investment and insurance solutions to suit your [client's] needs," says Mr. Banham. "For example, with some wealth solutions, you can set up separate contracts for each beneficiary and you also have the option to put the proceeds of the estate directly into an annuity - called a legacy settlement option."

All of this speaks to the notion that an advisor can help ease the estate settlement process by ensuring from the start that a thorough and complete plan is in place - a final gesture to encourage peace and security among family.

"Ultimately, the overall value of planning, developing an estate plan and including family in the planning discussions is that the client's wishes are respected and their assets are distributed as they intended without creating unnecessary stress and conflict," he says.

Advisor SunLife


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