You can try to ignore the topic, but doing so could lead to confusion and conflict among family members, as well as losses to your estate. According to a recent poll by the Canadian Imperial Bank of Commerce, more than 50 per cent of Canadians expect to leave behind assets upon death, but 47 per cent have never actually communicated their estate plans to their heirs.
The poll also shows that nearly 80 per cent of Canadians have not spoken with a financial advisor about taxes and other implications of passing along wealth to future generations.
Reluctance in these matters is understandable. Conveying your end-of-life wishes inherently involves consideration of an emotionally difficult time — a time that hasn’t yet arrived — but planning now and discussing your plan can prevent family conflicts and help preserve your estate assets.
If you’re not sure of where to begin the conversation, then consider the fairly technical topic of taxes. For example, you can clarify to your children — or other beneficiaries — that taxes are deferred when assets are left to a legal spouse. However, when the spouse dies and the assets are passed to children or other beneficiaries, the taxes apply.
Your estate plan and discussion of it should involve an effective strategy for minimizing the impact of taxes. For example, you may want to consider using a Tax-Free Savings Account, which can be willed to anyone — not just children — tax-free. The TFSA program has been active since 2009, and the 2015 annual contribution limit is $10,000.
Taxes are not the only thing to discuss with your family. Other issues may include joint bank accounts, avoiding probate, your use of trusts, and your intentions regarding vacation property. What you want to avoid is ambiguity that could result in unwanted surprises, family conflict and broken feelings.
It is also an excellent idea to work with a financial and estate planning lawyer to ensure that your message is clearly heard.