Up to $1 trillion could pass from baby boomers to younger Canadians over the next decade, but a lack of estate planning could complicate these wealth transfers and create unnecessary family stress
TORONTO, May 17, 2023 – The vast majority of Canadians believe it’s important to prepare a will or appoint a power of attorney to manage their affairs if they die or become incapacitated, but less than half of them have actually done so — and many of them don’t even know where to start.
A new report by the National Institute on Ageing (NIA) in collaboration with RBC Royal Trust finds that only 48 per cent of Canadians have a will; that number drops to 34 per cent for those aged 35 to 54. About one-third of Canadians (35 per cent) have appointed a power of attorney (POA), including 28 per cent of those aged 35-54 and only 53 per cent of those aged 55 and older.
The report, titled Where There’s a Will, There’s a Way: Exploring Canadian Perspectives on Estate Planning, looks at how well Canadians understand the importance of estate planning, whether they have taken steps to create an estate plan, and what’s stopping them from doing so if they haven’t already. It is based on a survey of 2,001 Canadians conducted by Ipsos in April 2022.
Estate planning can be an important way for adults of all ages to avoid unnecessary hardship and uncertainty in their later years. It allows individuals to outline their preferences for medical treatments and long-term care (LTC) services; establish how to cover the potential costs of care; and appoint powers of attorney to manage their financial affairs or make medical decisions if they are no longer able to.
“Estate planning can support Ageing in the Right Place by getting Canadians to consider potential LTC options and their associated costs, and ensuring that their preferences are respected in the future,” said Dr. Samir Sinha, director of Health Policy Research for the NIA.
Estimates suggest that up to $1 trillion could pass from baby boomers to younger generations in Canada over the next decade. Whether Canadians have established wills and estate plans will be central to the overall success of these wealth transfers, especially as family structures become increasingly diverse and complex. Unconventional family arrangements can complicate the distribution of assets following a death, particularly when a person dies without a will.
“Starting those conversations early on with family and your advisor and getting your will and POAs in order are the best ways to provide peace of mind when it comes to estate planning;” said Leanne Kaufman, president and CEO, RBC Royal Trust. “They are the cornerstones of any comprehensive financial plan.”
The survey identified several barriers that can stop Canadians from creating a will or appointing a power of attorney, many of which relate to financial literacy challenges:
The report recommends initiatives to raise awareness about the benefits of estate planning for Canadians of all ages and income levels, as well as educational outreach and supports to help them through the process. In addition, emerging digital tools could make estate planning more accessible and facilitate the process for Canadians who have more straightforward estates. The survey showed that younger adults in particular, but also many middle-aged and older adults, are open to using at least some digital tools and services to help plan their estates. For instance, some of these services allow users to create their own estate planning documents by accessing wills and POA documents online.
The survey was conducted by Ipsos online with 2,001 Canadians aged 18 years and older, from April 22-25, 2022. The findings have a margin of error of ± 2.5%, 19 times out of 20.
The National Institute on Ageing is a think tank at Toronto Metropolitan University (formerly Ryerson University) focused on the realities of Canada’s ageing population. Follow us on Twitter @NIAgeing and support our call for a National Seniors Strategy @NSS_Now.
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Stephanie MacLellanManager of Communications and Public Affairs, National Institute on Ageing stephanie.maclellan@torontomu.ca
Nathaniel Wallace Senior Manager, Corporate Communications, RBC Wealth Management nathaniel.wallace@rbc.com