Many are missing a critical financial safeguard, study shows
More than half of Canadians lack an estate plan despite the country experiencing a historic $1 trillion intergenerational wealth transfer, according to an annual study by IG Wealth Management. The study highlights a concerning trend of unpreparedness among Canadians for their financial future.
An estate plan, which typically includes a will, beneficiary designations, life insurance, a healthcare directive, and a power of attorney, is crucial for ensuring wealth is distributed according to one’s wishes and in a tax-efficient manner. Christine Van Cauwenberghe, head of financial planning at IG Wealth Management, emphasized the importance of such plans for all Canadians, regardless of their net worth, especially during this period of significant wealth transfer.
The study, conducted in partnership with Pollara Strategic Insights, revealed that many Canadians are unfamiliar with key aspects of estate planning. Approximately half of those surveyed admitted to not being knowledgeable about tax considerations (55%), the benefits of life insurance (47%), or the consequences of not having a will (47%) or power of attorney (44%).
The primary reasons cited for not having an estate plan included a perceived lack of sufficient personal wealth (29%), feeling too young to need one (14%), and the cost associated with creating a plan (13%).
Beyond wealth distribution, the study also underscored a significant gap in preparing for cognitive decline. Only 40% of Canadians have legal documents in place to safeguard their financial future in the event of a cognitive decline diagnosis. Furthermore, just 37% have made plans for their assets, and only 39% have designated who will manage their finances if they experience cognitive impairment.
“Conditions like Alzheimer’s disease and other forms of dementia can affect anyone at any time, and many underestimate their associated costs,” Van Cauwenberghe stated, stressing the need for comprehensive estate plans that account for such possibilities.
What steps do you think young people should take to plan for their financial future? Share your insights in the comments below.
