Estate planning involves arranging for the management of your affairs and distribution of your assets after your death or in the event you become incapacitated. To ensure you have a solid estate plan it’s vital to develop a comprehensive strategy that covers all of the key bases — including things like designating beneficiaries, outlining charitable gifts and considering potential estate taxes — to ensure that your financial affairs are managed efficiently. A well-developed plan also typically includes various estate planning documents, such as wills (including a living will), powers of attorney, a list of estate assets, and funeral and burial wishes.
Estate planning for seniors and elderly parents (and for that matter, new parents as well) is especially important because it’s a critical step to protect your assets, provide for your loved ones and ensure that your wishes are respected. It will give you financial security and peace of mind during your golden years and beyond.
Why Estate Planning is Important for Seniors
Estate planning is critically important for seniors for many reasons:
- Estate Assets: Estate planning lets seniors and elderly parents specify how their assets should be divided among their loved ones. This ensures that assets go to the individuals or causes that they care about. If they don’t have a will, it could be up to the law or court—and not their family or friends — to decide what happens to their estate assets even if they've told beneficiaries what they want them to inherit.
For unmarried couples, an estate plan can be especially important since unmarried couples don’t necessarily have the legal protections that married couples do. In some provinces or territories in Canada, assets may not automatically pass to the surviving partner. For example, someone in an unmarried long-term relationship may want their partner to inherit their home and other assets. Through estate planning, they can designate their partner as the beneficiary and avoid potential disputes with other family members that could go to court.
- Estate Taxes: Good estate planning can help seniors minimize estate taxes, which can be a significant issue for those with larger estates. Strategies like gifting property ahead of time and strategic asset allocation can help reduce the tax burden on their beneficiaries and ensure their estate can take advantage of any potential tax benefits.
- Protect Loved Ones: Seniors can use estate planning to provide financial security for their surviving partner and other dependents. This includes naming their partner as the beneficiary of life insurance policies and registered bank accounts. If one partner in an unmarried couple is financially dependent on the other, estate planning can be absolutely vital to maintain ongoing financial support for the partner left behind.
- Healthcare Decisions: Healthcare directives are a central part of estate planning, allowing seniors and elderly parents to select a trusted individual to make healthcare decisions if they lack the capacity to do so themselves.
- Avoiding Probate: Older Canadians may be able to use estate planning to avoid the probate process or minimize the time and cost of going to probate court.
Estate Planning Consideration for Seniors
Estate planning allows seniors to protect their loved ones and leave behind a meaningful legacy. Here are some essential components of a comprehensive estate plan:
Health Care Directives
Healthcare directives help you detail your medical preferences. You can specify things like whether or not you want life-sustaining treatments and if you elect to donate your organs, as well as outline other medical choices.
Long-Term Care Planning
Long-term care is often a major concern for seniors as they get older. Estate planning can include provisions for potential long-term care, like putting funds aside to cover nursing home or assisted living expenses.
We often want to leave behind a meaningful legacy for our loved ones. Estate planning is a good time to carefully consider what you want your legacy to be. For example, do you simply want to divide your assets among loved ones or do you also prefer to make contributions to charities that you support?
Providing for Children and Family Members
For seniors and elderly parents, estate planning is a way to safeguard your dependents’ financial security. You can use wills or trusts to specify how assets should be distributed to your children, other family members or friends. Note that it's essential to consider the unique needs and circumstances of each beneficiary and plan accordingly. For example, for minor children you may also want to appoint guardians or trustees to manage assets on their behalf.
Powers of Attorney
Seniors should consider powers of attorney for financial and health matters. In Canada there are two main types of POAs. A power of attorney for personal care lets a designated individual handle your medical decisions for times when you can’t communicate your wishes. A power of attorney for property lets someone you trust take care of your property and financial affairs on your behalf when needed.
Estate Planning Checklist for Seniors
There’s a certain satisfaction that comes from checking off tasks, especially when they’re important life planning to-dos like estate planning. Get a copy of your own checklist today!
How To Talk to Your Elderly Parents About Estate Planning
Discussing estate planning with elderly parents can be a sensitive and challenging conversation. However, having an open and honest discussion is the best way to ensure their continued financial security and the smooth future transition of assets. Here are some tips on how to approach this important yet uncomfortable talk:
1. Be Patient and Understanding: No one likes to talk about death. Keep in mind that estate planning for elderly parents can be emotional for everyone involved. Be patient and reassure them that this conversation is as much about honouring their legacy and ensuring their well-being as it is about maintaining the well-being of the family.
2. Open Communication: Be non-confrontational and let your parents know that you're there to listen to their concerns and wishes. Encourage them to express their thoughts and feelings without judgment. Sometimes it can help to know that other senior couples are going through the same difficult experience, so it may be a good idea to encourage them to also talk to trusted friends about their feelings regarding estate planning.
3. Ask Questions: Start by asking gentle, open-ended questions to get a sense of their current level of preparedness and understanding about estate planning. A question like, "Have you thought about what you'd like to happen with your assets?" can be a good way to start.
4. Take Notes: It’s wise to take detailed notes of your parents' wishes and preferences. This will help ensure that their plans are documented when it comes time to create a plan. Pay special attention to details like asset distribution, healthcare preferences, and any charitable intentions.
5. Provide Information: Offer to provide information and resources to help your parents better understand the estate planning process.
6. Follow-Up: After the initial conversation, set a plan for follow-up discussions and actions. Regularly checking in where they are in the estate planning process can help ensure that your parents' wishes remain accurate.
7. Respect Their Autonomy: Ultimately, it’s up to your parents to make an estate plan and you’ll need to respect your parents' decisions without unduly influencing them.
It's Never Too Late to Start Estate Planning
Estate planning is an important process for seniors and elderly parents as it offers numerous benefits, including financial security, healthcare control, potential tax savings, a philanthropic legacy, and peace of mind. It's never too late to start and Willful can help you create a legally valid and affordable estate plan.