Women face numerous unique financial challenges throughout their lives, but one of the most important is that, on average, they live longer than their male spouses. Today, about 80% of women will outlive their spouse, and 65% of Canadians aged 85+ are women. That means the vast majority of women will eventually be making key decisions about family finances on their own.
Are women engaged in their family finances?
A recent RBC Wealth Management study of high-net-worth individuals showed that 98% of women are involved in daily banking decisions and 84% are involved with the family investment portfolio. Further, the study showed women value family financial education, knowledgeable financial advice, and conducting financial research. This shows that most women are highly involved with their family finances. So what’s the worry?
The missing link: a wealth transfer plan
Despite high engagement in family finances, the study also highlighted that only 22% of high-net-worth women have a full wealth transfer plan in place. Yet, when it comes to transferring family wealth, women – probably more so than their male spouses – need to be prepared due to their longer life expectancies.
Wealth transfer 101
Transferring wealth is often about taking care of family or positioning younger family members to succeed. It can also be a way to pass on family values or create a lasting family legacy. A plan is the key to turning good intentions into good results.
The basics
While a comprehensive financial plan covers a lot more than wealth transfer, it’s an important first step to making informed decisions about timing, appropriate amounts and the best methods for passing down wealth.
A valid Will is the guiding document for handling your estate and transferring your assets. Keeping it up-to-date helps address the changes that take place over your lifetime, and choosing the right executor helps ensure your wishes are carried out.
Plan for potential incapacity by choosing a Power of Attorney both for property and for personal care. Being a Power of Attorney can involve a great deal of time and responsibility. The attorney you choose can also have a significant impact on the handling of your estate, so carefully consider your selection.
Prepare your family
Take the time to discuss and identify key family values, whether it’s education, professional life, community, philanthropy or otherwise. These conversations can serve as powerful uniting factors for families, help clarify the reasoning behind your decisions, and provide your beneficiaries with a sense of how to use the wealth they receive. Regardless of age, financial education is vital in preparing anyone to inherit wealth. Beyond family discussions, providing formal education and holding meetings to introduce your team of qualified financial, tax and legal advisors can both help boost financial literacy.
The value of advice
Aspects of wealth transfer such as handling unique needs or complex family dynamics, maintaining privacy, minimizing taxation and ensuring your wealth will be distributed as you intend can sometimes seem overwhelming. However, there is a vast array of solutions and strategies to help navigate virtually any circumstance. Estate planners and tax specialists can walk you through the pros and cons of gifting versus inheriting, or how to use beneficiary designations and joint ownership. They can also help you weigh tax, insurance or trust strategies. Regardless of the challenges, there are solutions that can be customized and aligned to suit your goals.
Contact me today at 604 981 2306 to review your wealth management plan.