The majority of Canadians are losing out on opportunities to maximize inheritance for loved ones

Survey reveals that a lack of knowledge about estate planning fundamentals is a leading cause: RBC Insurance

TORONTO, May 2, 2023 /CNW/ - Inflation and market volatility continue to hammer at Canadians' spending and savings, so when it comes to estate planning, a large majority want to maximize the inheritance left to their loved ones, be it by avoiding unnecessary estate fees (87%) or minimizing out-of-pocket settlement costs (86%) according to a recent survey by RBC Insurance. This is particularly true among those 55+ (93% and 91% respectively).

However, the findings also suggest there is a lack of planning and prioritization among Canadians when it comes to preparing their estate, which not only jeopardizes the value of the inheritance but also places potential hardship on beneficiaries.

"Estate plans are important to ensure loved ones aren't left feeling overwhelmed when managing your end-of-life finances," says Selene Soo, director of Wealth Products for RBC Insurance. "This includes paying out-of-pocket for funeral arrangements, mortgage payments, utility bills, and lawyer fees, among other things."

What happens to your money after you die?

Many Canadians don't have a clear understanding of what happens to their money after they die, revealing a lack of knowledge about important aspects of wills and estate planning:

• 61% don't feel knowledgeable about or have never heard of the probate process
• 62% don't know that having a will does not prevent an estate from being taxed after death
• 57% aren't aware that estate taxes may be reduced by insurance policy benefits, which offer opportunities for your inheritance to bypass probate

This awareness gap makes it more difficult for Canadians to set up their estate advantageously through financial products and services that can help to leave the legacy they intended. For example, only 25% say they are knowledgeable about segregated funds, an investment solution that can help maximize an inheritance by reducing estate fees, since the funds bypass probate and are paid directly to an appropriate named beneficiary.

Talking to loved ones and financial advisors inspires confidence

Adding to the lack of knowledge is that Canadians aren't having open conversations about their preferences for what happens with their assets at the end of their lives. Communicating your estate plan to loved ones is important, yet four in ten Canadians (42%) aged 55+ are not talking openly about their long-term wishes and how they want their estate plan to be executed.

In fact, two in five (38%) aged 55+ say their financial affairs are private and they don't feel comfortable discussing them with their loved ones, while one in five (21%) say that speaking with their family about it will cause infighting.

Furthermore, one-third (34%) say that their spouse/partner is not familiar with what's in their estate plan, while half (51%) say their financial planner is not familiar, despite the knowledge and advice they could provide.

Yet — perhaps not surprisingly — having open conversations about how you want to preserve, manage and distribute assets reflects positively on Canadians' feelings and confidence regarding retirement and leaving a legacy. Among those Canadians who have open conversations about their estate, 60% feel they will leave loved ones financially secure (versus 39% who do not), and 53% feel confident/comfortable in their ability to pass on a legacy (versus 29% who do not).

"Having an estate plan in place allows you to protect what's most important to you and will help you to better manage your family's financial future," adds Soo. "It will also give you peace of mind that your wishes are in place and make the transition of your assets to your loved ones a quick and smooth process."

About the RBC Insurance Study

These are some of the findings of an Ipsos poll conducted between March 21 to 24, 2023, on behalf of RBC Insurance. For this survey, a sample of 1,501 Canadians aged 18+ was interviewed online. This total sample included a boost sample of those aged 55+. Quotas and weighting were employed to ensure that the sample's composition reflects that of the Canadian population according to census information. The precision of online polls is measured using a credibility interval. In this case, the results are considered accurate to within ± 2.9 percentage points, 19 times out of 20, of what the results would have been had all Canadians been surveyed. The credibility interval will be wider for subsets of the population.

About RBC Insurance

RBC Insurance® offers a wide range of life, health, home, auto, travel, wealth and reinsurance advice and solutions, as well as creditor and business insurance services. RBC Insurance serves nearly 5 million clients globally, catering solutions uniquely for individuals, businesses and groups. Its brand is built on trust, strength, stability and continual success, and it has consistently been awarded strong credit ratings by A.M. Best and S&P Global. Its over 2,600 employees hold people at the heart of their service, continually striving to offer the best advice and care when their clients need it the most. For more information, please visit rbcinsurance.com.

Any amount that is allocated to a segregated fund is invested at the risk of the contract holder and may increase or decrease in value (subject to death benefit and maturity guarantees).

SOURCE RBC Insurance

please contact: Jana Lepp, Senior Manager, Corporate Communications, RBC Insurance, [email protected], 416-348-2966