As vice president and regional director, Lydia Potocnik leads the Trust and Estate Services team in Ontario for BMO Trust Company, which provides individuals, families, and businesses with valuable estate, trust, and incapacity services. She believes it is important for everyone to have an estate plan in place — and for women, there are times when it needs to be made a priority.
By Lydia Potocnik
Women find themselves in a different situation today than they did fifty years ago — a time when it was assumed that women couldn’t and shouldn’t be in charge of financial decisions. Now, women are not only empowered and capable, their personal wealth is also growing. They are in a strong position to be making decisions around estate planning on their own if they are single, or collaboratively with their spouse as an equal partner.
So why do so many women avoid the estate planning conversation?
My experience points to a few reasons. Far too often, clients wait until they have a health crisis, which is not ideal for a process that requires well thought out decisions and time to do it right. Many feel that it is a topic related to death, which they find difficult to have to deal with, or they erroneously believe that estate planning is not necessary for them. Contrary to popular misconception, you don’t need to own a big house or have millions of dollars in an investment account to warrant putting an estate plan in place. It also doesn’t matter what age you are, your marital status, or if you have kids. For all women, estate planning is just as important as financial planning. And in some cases, it needs to be made a priority:
While it’s unpleasant to think about your spouse passing on, it’s a reality that you may one day have to face (thanks to female longevity, this is especially true if you have a husband). It is critical for women to be involved in the estate planning process, to ensure you agree upon how assets will be distributed after your partner’s death, and that your own well being as a widow is secure. This also means you will have the last word on what ultimately happens to your shared assets. Deciding how to divide things up amongst family members or philanthropic causes should not be a last-minute process.
The number of female entrepreneurs is growing in Canada. In fact, self-employment among men has remained relatively flat since 2009, while it has been increasing among women. If you are part of this new wave of entrepreneurs, you not only need to consider protecting your assets, but you also need to plan for the succession of your business should you die or have a health crisis.
In the event of a divorce, a lot of women become custodial parents with either primary control or shared custody of their young children. If you have kids under the age of 18, you’ll want to make sure that they are not only financially taken care of, but also that you have appointed a guardian in your will to look after them.
Blended families that include children from a previous marriage have become more commonplace, and this can mean special estate planning considerations need to be taken into account. What a woman will often want to do is provide for her second spouse, but she may also want her wealth to ultimately end up in the hands of her kids from her first marriage. A spousal trust, in that scenario, is one planning solution to consider.
Even if you already have an estate plan in place, major life changes — such as the birth of a child, the acquisition or sale of a business, or the death of a beneficiary — means your estate plan needs work. And if nothing eventful has happened, you should still be revisiting your estate plan every three to five years, to account for things like changes in tax laws.
If you already recognize the importance of estate planning, you might be wondering how to get started. There are many individuals offering estate planning services, but it has become such a niche area of expertise that I encourage you to only sit down with someone who has strong experience in the field.
When working with BMO Trust Company clients, I ask that they come to their first meeting armed with a list of everything they own, as well as how they want to divide it up. Beyond that, the estate planning lawyer should be able to offer guidance, ensuring you are making decisions around critical issues, and focusing on four components: your will, which is the cornerstone of the estate plan; power of attorney documents, both for property and personal care; setting up trusts, as needed; and reviewing beneficiary designations on investment vehicles, such as RRSPs, Tax-Free Savings Accounts, and life insurance policies.
Communicating your estate plan to your executor and your beneficiaries is also critical when it comes to estate planning. Women often are concerned about preserving family relationships and ensuring that their children or beneficiaries get along after their death. As such, discussing your wishes and sharing with your family what your ultimate estate plan looks like is a good idea.
Whether it be to your children or your favourite charity, transitioning your wealth comes down to your ultimate wishes. Documenting those wishes in an estate plan is critical, no matter who you are and what you own, so don’t put off this important exercise until it’s too late.