Only 15 percent of Canadians have an estate plan in place to outline how their money and belongings will be transferred to surviving family members after they’re gone, a new survey suggests.
Few Canadians are making estate planning a priority despite more than 80 percent of survey respondents expressing a desire to ensure the financial stability of their heirs, says the newly released Ipsos survey for RBC Insurance.
And while more retirees prioritize estate planning than their younger counterparts, only 24 percent of Canadians 65 and older said they have an estate plan, and just 38 percent have life insurance or money set aside to pay for final expenses.
Retirees are also the least likely to be knowledgeable about insurance policies, the survey found.
Only 47 percent of retirees were knowledgeable about term life insurance, in contrast to 50 percent of the overall Canadian population, the poll found. Similarly, knowledge of whole life insurance stands at 46 percent for retirees versus 50 percent for Canadians. For universal life insurance, the figures dropped to 29 percent for retirees compared to 40 percent for the general population.
Although a considerable portion of Canadians surveyed do not possess estate plans, 82 percent said they consider it essential to ensure that their family receives financial support swiftly to prevent out-of-pocket expenses for funerals or other end-of-life costs.
Additionally, 76 percent expressed a desire to reduce the tax burden on their estate to maximize the inheritance left for their family, and 70 percent said they intend to pass on financial assets to their loved ones, the survey found.
A total of 53 percent of Canadians polled said they don’t want to be a burden on their families after their death, but were taken aback by the considerable responsibilities associated with handling a loved one’s estate, encompassing both financial and administrative duties, RBC said.
“If not properly planned for, end-of-life costs may leave your family paying out-of-pocket,” RBC said.
Even if money is available, it will likely be tied up in probate—a legal process that can last several months or more than a year, as the court deliberates on the allocation of assets and debts and identifies the individual authorized to act on the deceased’s behalf, RBC said.
Insurance products such as life insurance and segregated funds, however, are designed to automatically bypass probate when a beneficiary is named.
“This means your loved ones will receive any inheritance quickly, so they can be ready for financial surprises that may come their way,” the company said. “It also means you can minimize potential probate-related fees, making sure more money gets to your loved ones.”
