Paving the way to peace of mind
PROPER ESTATE PLANNING STARTS WITH A GOOD CONVERSATION
There’s a lot more to estate planning than getting your paperwork in order.
“Just because a person has a will and powers of attorney in place doesn’t mean they have a good estate plan,” says Gord Graves, vicepresident, national director of trust and wealth services for BMO Private Banking, part of BMO Wealth Management. “Too often, people create these documents and don’t keep them dynamic with changes that happen at different times of transition throughout their lifetime.”
When people are younger, estate planning is largely driven by the need to protect their loved ones should they experience an unexpected event. “When you’re young, you’re not really in the head space to think about things like legacy and putting protective measures in place relative to the uncertainties of aging. As people age, the conversations begin in earnest,” Graves says.
He advises reviewing your estate plan with fresh eyes around the age of 65 to 70. “At that point concerns related to the uncertainties of aging, your legacy, combined with more clarity around your family needs and financial resources will drive a different planning conversation.”
Revising paperwork is the easy part. The more difficult aspect of estate planning is conveying your wishes and to aid in safeguarding that they will be carried out by the appropriate person, he adds. “These things really have to be sorted through before you reach the point you can’t look after your own affairs. All too often questions are being resolved at a moment of crisis rather than thinking ahead so you can put structures in place and give everyone some peace of mind.”
As with any other personal planning exercise, there is no such thing as a one size fits all approach. According to Michael Wood, senior vicepresident and managing director for BMO Nesbitt Burns, part of BMO Wealth Management, every situation is unique from a financial, physical and emotional aspect
Family members need to understand well ahead of time who should be in charge of financial and health care decisions in the event of changes in mental competency or ill health. An in-depth conversation involving multiple family members can be helpful in determining wishes relating to financial needs and preferences, powers of attorney (financial and health) and beneficiaries, among other concerns.
There are multiple considerations from a financial standpoint, ranging from tax implications and insurance coverage to long-term care and legacy planning that should involve a professional, Wood notes. “Tax codes can be long and complicated, so we can work with you and your tax professional to discuss available options. A lot of people, for example, don’t know what the tax system offers to support financial needs in a person’s declining years.”
Appointing an executor can also be a challenge. Defaulting to the spouse or eldest child or even multiple beneficiaries within the family can create problems if not well planned. “Many people don’t want the burden or don’t have the time to manage all the paperwork and filings involved. In some cases, it might be best to consider an independent executor,” Wood says.
The key message, he says, is to have the conversations with family members and financial planners.
“T hose conversations should be had sooner rather than later because as we all know from experience, circumstances can change.”
Graves acknowledges these are not easy conversations to have. But there are many meaningful things that can be done while a person is alive and able to make decisions. “A trusted professional who specializes in estate planning can help to open the doors by asking the right questions to understand concerns and intentions and help to provide guidance on how to best achieve them.”
Estate planning is not about controlling from the grave, he adds. “It’s making sure your intentions are understood and the appropriate structures are in place both related to the uncertainties as you age should you not be able to make your own decisions, and ensuring your legacy can be continued as time goes on,” Graves notes. “Having conversations around why things are being done the way they are through your estate plan with your family are a critical part of the process. No one wants to leave behind a fractured family.”
For more information, visit www.bmo.com/wealth.
BMO Wealth Management is the brand name for a business group consisting of Bank of Montreal and certain of its affiliates, including BMO Nesbitt Burns Inc., in providing wealth management products and services. BMO Nesbitt Burns Inc. is a member of the Canadian Investor Protection Fund and member of the Investment Industry Regulatory Organization of Canada.
BMO Private Banking is part of BMO Wealth Management. Banking services are provided by Bank of Montreal. Investment management services are provided by BMO Private Investment Counsel Inc., an indirect subsidiary of Bank of Montreal. Estate, trust, planning, custodial and tax services are offered through BMO Trust Company, a wholly owned subsidiary of Bank of Montreal.
This article is provided for informational purposes only and does not contain any legal, tax, investment, or estate planning advice. Particular investments and/or trading strategies should be evaluated relative to each individual’s investment objectives and other personal circumstances. Individuals should consult their own professional advisors. Opinions are those of the author and may not reflect those of BMO Wealth Management. Information contained in this editorial has been compiled from sources believed to be reliable but no representation or warranty, express or implied, is made as to their accuracy or completeness.
THE FIRST THING I SAY TO FAMILIES INVOLVED IN ESTATE PLANNING IS, ‘DON’T FEEL THE BURDEN SOLELY RESIDES WITH YOU’