Why it’s hard to talk about end-of-life planning and how to take the first step

December 12, 2023 | RBC Wealth Management


Finding the motivation to engage in estate planning and create a Will is all about having the right mindset.

Canadians are struggling to talk about end-of-life planning, despite recognizing the importance of estate planning. But failing to have a strategy in place and properly documented could leave individuals’ finances in disarray, putting the onus on the courts to make sense of their legacy after their death.

The National Institute on Ageing (NIA), in collaboration with RBC Royal Trust, produced a report that examined Canadians’ views on estate planning. The report, based on the results from a 2022 Ipsos survey conducted by RBC Royal Trust, found that nine in 10 (91 percent) of those surveyed say Wills are a critical part of an estate plan, and 86 percent say appointing a power of attorney (POA) is also important. And yet, just one-third (30 percent) of Canadians say they have an estate plan and less than half (48 percent) have a Will.

For many individuals, the paralysis stems from not knowing how to begin the process of creating one, says Leanne Kaufman, president and CEO of RBC Royal Trust. She says she often hears people say they don’t have enough assets or their estate isn’t big enough or they’re too young to start considering end-of-life planning.

But there’s also a lack of understanding surrounding the implications of dying without a formal Will in place. “Regardless of the size of these estates, chances are if you own assets or have debt—or both—someone is going to have to step in on your behalf and wrap up those affairs,” she says. “If you haven’t created a Will and you haven’t established an executor, then family or friends will have to navigate a court process to get the authority to step in.”

So why are Canadians struggling to have these conversations with their loved ones about their final wishes? Michael Sherman, head of Behavioural Economics at RBC, says it’s an all-too-human thing for people to put off something they know they should do, especially when it concerns their mortality.

Unconscious biases are at play when it comes to end-of-life planning

According to Sherman, people assume their decision-making is logical and based on rationality. “That’s not always the case,” he says. “Coming up with a Will is a key example of something which you should do—it’s logical—but people tend to put it off.”

Behind the decisions people make are unconscious biases that shape the way they think.

Sherman says there are several of these that impact end-of-life planning, but one of the most common is something called present bias—the idea of living in the moment. “It’s the concept that if people have a choice to save for retirement or spend that money today, they somehow disassociate with their future self,” he explains. To overcome this bias, people must recognize that they and their future self are the same.

Another hurdle is loss-aversion bias, in which individuals avoid a choice out of fear that it may result in a loss. “When people create a Will, there will be losses … they have to pay to create a Will,” notes Sherman. He says the best way around this bias is to recognize that it’s necessary and something people will have to pay for regardless, so it’s better to do it sooner rather than later.

Status quo bias can also be a factor. “It’s all about inertia … unless there’s an overwhelming reason to change, people just stick with the present,” he adds.

What’s needed is motivation. “It’s very important that people understand the reasons behind writing a Will,” explains Sherman. “Your job should be to act now so that when you pass away, your legacy will be that you enabled a smooth transition in which everything was taken care of to help your beneficiaries and your family.”

Each province and territory has its own rules for how assets will be distributed if someone dies without a Will. Often, they favour traditional family structures, which can create problems if there are meaningful people in someone’s life who don’t fit within that framework. An estate plan helps to organize an individual’s wishes and protect their loved ones.

Consider the whole financial picture

Regular reviews with a wealth planning advisor can also create an opportunity to go deeper into estate planning. At the bare minimum, says Kaufman, everyone should have a power of attorney appointed and a Will in place. “But that’s not an entire estate plan,” she says. “Those are just the cornerstone documents.”

A holistic estate plan also maps out how the POA and Will work with other financial elements, such as designated beneficiaries, registered retirement savings plans (RRSPs), tax-free savings accounts (TFSAs) and insurance policies. “Are there any tax- or probate-planning strategies that have been put into place? Are there any family trusts at play? Because they’re all interconnected and touching, one could have ripple effects on the other,” says Kaufman. “So, it’s never advisable to just focus in on one of those items without considering how it relates to the broader plan.”

The more complex the situation, the more important it is for individuals to seek professional advice to help them protect their interests. Not only can they assist in navigating the planning, says Sherman, they can help people approach the conversation with family members who will be affected by an end-of-life plan.

How children can bring up estate planning with their parents

Some adult children worry that asking their parents about their Will might sound like they’re focused on their potential inheritance, notes Sherman. But the discomfort is better than the potential fallout from not asking, he says.

For children looking to broach the subject with a parent, Kaufman recommends starting with an organic prompt, something like, “I just watched a webinar (or read an article) and realized I don’t know how you’ve organized your affairs.” It can help spark the discussion. “It’s more of a logistical-preparedness conversation rather than a who’s-going-to-get-the-assets conversation,” says Kaufman.

Having these discussions and committing to a solid plan is an opportunity for people to leave their legacy in order, says Sherman. The alternative is to leave behind a legacy of burden. “The roller-coaster of not having a Will is something I wouldn’t wish on anyone.”

Watch the video below to learn more about navigating difficult conversations with your family around estate planning.

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