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Communicating Your Estate Plan is a Vital Part of “The Estate Plan”

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An estate plan is an arrangement of your financial affairs designed to accomplish several essential financial objectives, both during your lifetime and upon your death. The plan should accomplish the following goals:

  • Provide tax-efficient income during your lifetime, before and after retirement
  • Provide tax-efficient dependant support after your death
  • Provide tax-efficient transfer of your wealth
  • Protect your assets
Estate Planning letter

Summary and Takeaways

Effectively communicating your estate plans to those who need to know them is vital. Otherwise, those wishes may remain unclear or completely unknown. Setting up a reliable communication plan is therefore a very important part of overall estate planning. That includes communicating proactively with the executor of your estate, your healthcare Power of Attorney, and those you select to oversee the disbursement of your wealth and other assets.

Key Takeaways

  • Wills and Powers of Attorney are the most common documents used to outline and convey your estate plan.
  • They should be drafted in your jurisdiction of legal residence and reviewed at least every five years − or whenever a major material change in your life occurs.
  • Notify those you appoint to perform important functions – such as the executor of your estate. Ensure that they fully understand their responsibilities and agree to do what is asked of them.
  • Keep in mind that even your spouse may not have the legal authority to take charge of such responsibilities, unless you specifically authorize them to do so
  • That’s another reason why involving your attorneys, financial advisors, and tax planners in these matter is so crucial and helpful.

Wills and Powers of Attorney are the most common documents used to outline your estate plan. Wills and Powers of Attorney should always be drafted in your jurisdiction of residence, and should be reviewed by your financial advisor, accountant, and estate attorney at least once every 5 years, or when a material change in your life occurs. 

A Will outlines your wishes for your assets after you are deceased – e.g., how, when, and to whom your assets will be conveyed upon your death. You designate an Executor(s) within your Will to carry out your wishes as described in your Will upon your death. It is important to notify your Executor(s) of their role, and what it entails. To help you do this, we have drafted a sample, customizable message below that you can send to your designated Executor(s).

A Power of Attorney for Property allows a third party whom you designate to handle your personal financial affairs (e.g., paying bills, managing investments, etc.) should you become incapacitated and are no longer able to do so yourself. Unfortunately, a spouse has no automatic legal authority to undertake these actions on behalf of an incapacitated spouse (even though many times they do). It is important to notify anyone you designate with Power of Attorney of their role, and what it entails. To help you do that, we have drafted a sample, customizable message below that you can send to those you designate with Power of Attorney.

A Power of Attorney for Personal Care allows a third party that you designate to make medical decisions on your behalf, should you become incapacitated and are no longer able to do so yourself.  Unfortunately, a spouse has no automatic legal authority to undertake these actions on behalf of an incapacitated spouse (even though many times they do). It is important to notify those you designate with Power of Attorney of their role, and what it entails. To complete this, we have drafted a sample, customizable message below that you can send to your Attorney(s) during your lifetime.

If you have any questions about your estate plan, or would like a review of your current estate, please reach out to your Cardinal Point advisor. 

SAMPLE MESSAGE TO EXECUTOR OF WILL:

Dear [Executor’s name],

I am writing to provide you with some instructions regarding your role as the Executor of my Will.

As the Executor, it is your responsibility to ensure that the terms of my Will are carried out in accordance with my wishes. This will involve several tasks, including:

  1. Obtaining a copy of the Will and providing it to the appropriate parties, such as the probate court and any beneficiaries named in the Will.
  2. Identifying and inventorying my assets, including any real estate, personal property, financial accounts, and other valuables.
  3. Paying off from my estate any outstanding debts or liabilities that I may have at the time of my passing.
  4. Distributing my assets to the beneficiaries named in the Will according to my wishes.
  5. Filing any necessary tax returns and paying from my estate any taxes that may be due.

It is important that you follow the instructions outlined in my Will as closely as possible, and that at all times you act in the best interests of the beneficiaries. If you have any questions or concerns about your role as the Executor, please do not hesitate to contact me or my attorney for guidance.

For reference, below is the contact information for the professional advisors with whom I work:

  • Estate attorney: 
  • Accountant: 
  • Financial advisor:

Sincerely,

[Your name]

SAMPLE MESSAGE TO REPRESENTATIVE FOR POWER OF ATTORNEY:

Dear [Representative’s name],

I am writing to provide you with some instructions regarding your role as the attorney-in-fact (representative) under my Power of Attorney.

As my representative, it is your responsibility to act on my behalf and make decisions for me in the event that I become incapacitated or otherwise unable to make decisions for myself. This may include making financial decisions, managing my property, or making medical decisions on my behalf.

It is important that you follow my wishes and act in my best interests at all times. To help you understand my wishes, I have provided you with a list of my values and priorities, as well as any specific instructions that I have included.

In carrying out your duties as my representative, you should also be mindful of any legal or ethical obligations that you may have. If you have any questions or concerns about your role, please do not hesitate to contact me or my attorney for guidance.

For reference, below is the contact information for the professional advisors with whom I work:

  • Estate attorney = 
  • Accountant = 
  • Financial advisor = 

Thank you for agreeing to serve as my representative. I have complete trust in your ability to carry out your duties in a responsible and competent manner.

Sincerely,

[Your name]

Disclaimer: The above draft messages do not constitute legal advice. We encourage you to customize your messages to your Executor(s) and those you designate as representatives with Power of Attorney.

Estate Planning when moving from the U.S. to Quebec

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In a province ripe with culture, many Québecers living abroad consider a future in returning home. Whether it’s the French language, European architecture, half million lakes, maple syrup, poutine, or to be close to family, many Québécois possess the desire to relocate to their roots. The assets they’ve accumulated in their absence dictates careful financial planning, especially when relocating from the U.S. This blog focuses on some of the estate planning needs one must address in such a move.

Cross Border Planning for Quebec

Summary and Takeaways

Québec governs the ways in which estates are legally dealt with in its own unique way, following what is called a Civil Law system. That particular system has rules that are different from the rest of Canada. That’s important to know if you are returning to Québec from the U.S. because such a move may necessitate revisiting your estate planning to update it based on the Québec system. In fact, as soon as you re-establish legal residency in Québec, its estate laws legally take precedence over laws elsewhere in the world.

Key Takeaways

  • Québec law defines easily transferred property – like bank accounts, computers, and vehicles – as “moveable,” whereas immovable assets like houses and land are deemed “immovable.”
  • The laws where one resides govern transfer of movable property assets, whereas immoveable property is governed by the laws where those immoveable assets are located.
  • Beneficiaries are referred to as legatees, and for them spousal tax-free rollover rules apply to retirement accounts, so taxes can be deferred in those until the death of the surviving spouse.
  • A mandate document, synonymous with a power of attorney document, can be drafted by a lawyer in Québec. The same goes for Advanced Medical Directives regarding end-of-life care.

Embedded in the fabric of Québec’s estate organization is the Civil Law system. This is unique to Québec as all other provinces and territories within Canada operate under Common Law. The judicial system under Common Law is an evolution of laws based upon precedents established in verdicts based on previous case decisions; precedent develops the interpretation and application of law over time. Civil Law focuses on a comprehensive codification of rules. As such, the courts first refer to the Civil Code of rules before weighing against precedent from previous decisions. Whether an individual or couple is moving from another province or from the U.S., it stands to reason that the foundational principles of Québec’s Civil Law tradition necessitate a reconstruction of one’s estate plan.

Take, for example, a Canadian couple living in the U.S. with a young child who is a dual citizen. The family contemplates returning home (to Québec) to raise their child close to relatives. The parents took prudent steps to assemble a U.S.-based estate plan inclusive of a trust, wills, powers of attorney, and healthcare directives. Furthermore, they executed their estate plan by retitling/settling applicable assets into their trust and added beneficiary designations to relevant assets and accounts to mitigate issues with probate. The moment this couple re-establishes Québec residency, the law of the province (Civil Law) supersedes the laws of the former state in which the couple had lived.

“Movable vs Immovable Property”
Per Québec’s Civil Laws there is a big difference between the rules that govern the transfer of “movable” vs. “immovable” property at death. As its name suggests, “movable” refers to tangible property that can easily be transferred (ex. vehicles, computers, investments, and bank accounts, etc.). On the other hand, “immovable” property is not easy to transport and can lose its original design and shape (ex. homes, land, trees, etc.). The law of the owner’s place of domicile and death dictates the transfer of “movable” property whereas the laws of the locality in which “immovable” property is located will govern the succession of that asset.

In the aforementioned example of a couple moving from the U.S. to Québec, their asset base consisted of an IRA, Roth, 401k, RRSP, LIRA, taxable investment, and bank accounts as well as a home in Florida. In this case, all assets are considered “movable” other than the home. This is an important distinction given what follows.

Account Titling and Beneficiary Designations
The province of Québec does not recognize joint account titling, nor do they honor beneficiary designations, unless the asset is an insurance product or an RRSP/RRIF/TFSA/RDSP issued by an insurance or trust company. Along those lines, if these tax deferred account vehicles are structured as a fixed-term annuity, they can pass by beneficiary designation. In Québec, a beneficiary is called a “legatee.” Note that where an individual is resident in Québec, it is not possible to name a legatee of a registered plan who is living outside Quebec. The “movable” assets previously discussed, and their associated titling and beneficiary designations, would be rendered invalid according to Québec estate laws. This could create considerable tax and estate inefficiencies for loved ones left behind unless an official Québec estate plan was constructed. The “immovable” assets in the previous example (Florida home) would be governed by that state’s law, and as such could retain its trust titling. That said, there can be significant issues with retaining a U.S. revocable living trust as a Québec resident. For more information on Canadian resident tax implications of a U.S. trust see — What do I do with my U.S. Revocable Trust if Moving to Canada?.

Québec Estate Planning – Notarial Will
Let’s return to the family moving from the U.S. to Québec. Certain “movable” property would need to remain in the tax jurisdiction that governs the account (ex. IRA, Roth, 401k). It can be challenging to maintain assets in the U.S. as a non-resident. See “Residents of Canada: Tax Ramifications of Being Forced to Liquidate a U.S. Retirement Account“. From an estate standpoint, if the Québec will is drafted properly, the issue of non-recognition of a beneficiary on these cross-border retirement accounts can be rectified. If the proper form of a will (Notarial) is executed, then “probate” can also be circumvented. In an ideal world, the Québec will mirrors the beneficiary designations at the U.S. and Canadian financial custodians so there are no inconsistencies from the laws in which the owner and asset reside. If a spouse were named legatee on the retirement account, the Canadian spousal tax-free rollover rules would apply and tax would be deferred until the death of the surviving spouse. The Notarial Will does not have to be verified following the death of the testator. In addition, there are no probate fees in Québec, and probate is not required if the will has been prepared by a Notary.

Québec Estate Planning – Mandates
A mandate is a specific type of contract whose general rules are set out in the Civil Code of Québec. A mandate can also be referred to as a power of attorney. The person who is granting the mandate is the mandator and the person representing the mandator is the mandatary. This mandate can be drafted by a lawyer in Québec and is similar to a non-continuing power of attorney for property.

Québec Estate Planning – Protection Mandate
This mandate is given to a person in anticipation of the mandator’s incapacity. These powers are not granted until the court or a notary approves the occurrence of the incapacity. Aside from the naming of the mandatary and their substitute, the protection mandate can include instructions concerning:

  • Scope of the mandataries’ powers;
  • Family protection (ex. appointment of a tutor if the client is the parent of a minor child, authorize the mandatary to use the mandator’s assets for the benefit of the spouse and children);
  • Access to medical records;
  • Consent to organ donation;
  • End-of-life care;
  • Accommodation (ex. whether the person wants to stay home or be placed in a nursing home);
  • Management of the business if any;
  • Maintenance and management of property;
  • Procedures for reporting on the administration of the property to prevent abuses (rendering of accounts).

Québec’s Estate Planning – Advanced Medical Directives
In addition to the protection mandate, Québec residents can also write Advanced Medical Directives allowing the mandator to express their consent to care deriving from the Act Respecting End-of-Life Care. Health professionals that have access to them are obliged to comply. The terms of the directives can be modified at any point, provided that the mandator has capacity.

In Conclusion – While the concepts are similar, there are significant discrepancies when comparing Québec estate planning to that within the U.S. and the remaining Canadian provinces and territories. Even the terminology is different: executor vs. liquidator, beneficiary vs. legatee, power of attorney vs. mandate.

Moving from the U.S. to Canada is a complex endeavor and one that penetrates all layers of cross border planning inclusive of the estate components. Moving from the U.S. to Québec has additional layers of challenges. Wisdom requires a prudent approach in seeking guidance from cross border experts. For more information contact Cardinal Point.

Gifting Strategy for U.S. Citizens with a Non-U.S. Citizen Spouse Planning a Relocation to Canada

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There are notable instances where having a non-U.S. citizen spouse results in complications when it comes to tax and estate planning.  For example, there is no estate tax marital deduction when the donee spouse is not a U.S. citizen unless a QDOT, a form of qualified domestic trust, is used.  This QDOT structure is not an ideal planning structure in many situations.

However, there are certain situations where having a non-citizen allows for tax planning opportunities that are not available to couples where both individuals are U.S. citizens.  In this article, we will discuss one such scenario.  This scenario and the case facts have been simplified to focus on potential benefits of using this gifting strategy.  If this were an actual client situation, there would be additional facts to consider, and each case should be evaluated on its own facts and circumstances.

Summary and Takeaways

Estate and tax planning is always complicated, but can become more complex in situations involving U.S. citizens moving to Canada with spouses who are not U.S. citizens. On the other hand, there are certain kinds of asset-gifting strategies that may offer unique benefits to lower tax exposure. As is the case with all complicated tax matters, it is recommended that you consult a qualified and experienced cross-border tax and financial professional to help you decide what steps to take.

Key Takeaways

  • You will want to avoid having to pay taxes on unrealized gains in both countries.
  • Splitting income between spouses may be beneficial in that regard when it comes to Canadian taxation.
  • Gifting of assets to your spouse may offer the potential to reduce their net worth to avoid expatriation taxes.
  • If splitting income is the goal of the gift, give that gift before establishing Canadian residency.
  • If your spouse is a green card holder, that can require different strategies and solutions that are best formulated with the guidance of a cross-border tax planning expert.
  • Start consulting them as soon as you begin preparing for relocation to Canada, because effective planning may take time to design and execute.

The case facts are as follows, using the fictitious names of “Janet” and “John” for the two spouses.

  • Janet and John are a married couple from Texas who are moving to Alberta, Canada on July 1, 2021. They expect to remain there for the foreseeable future, and feel it is likely that they will retire in Canada.
  • Janet is a U.S. citizen and John is a Canadian citizen who has been living in the U.S. for the last 10 years. He has held a Permanent Resident Card (“Green Card”) for the last five years.
  • Janet has a large brokerage account that contains numerous positions with significant unrealized capital gains. The value of this account is USD$3,000,000, and total unrealized gains are USD$1,000,000.
  • While John has some retirement assets, he does not own a brokerage account.
  • Janet’s net worth is below the current estate and gift tax exemption.
  • John is expected to earn significantly less taxable income on an annual basis compared to Janet in the future.

Before we dive into the gifting strategy, it is necessary to have a brief refresher on certain points related to the Canadian taxation of brokerage accounts.

Canadian Taxation of Brokerage Accounts Upon Becoming a Canadian Tax Resident
In a previous article of ours https://cardinalpointwealth.com/2018/10/08/residents-of-canada-what-are-the-canadian-and-u-s-tax-ramifications-when-being-forced-to-liquidate-a-u-s-brokerage-account/ we outline some of the Canadian income tax implications of becoming a Canadian resident.  Here is a summary of certain facts that are most important for this discussion:

  • There is a deemed disposition of assets immediately prior to becoming a Canadian resident.
  • There is a deemed reacquisition of those same assets at the time you become a Canadian resident. The cost basis of these assets for Canadian tax purposes would equal their fair market value on that date.
  • Each spouse is required to file their own individual tax return in Canada.

For the purposes of our discussion, it is also important to note that Canada has income attribution rules that are applicable in various scenarios, one of which relates to gifts between spouses.  A detailed explanation of these rules is beyond the scope of this article, but here is summary of certain relevant points:

  • If a Canadian resident were to gift assets from their brokerage account to their Canadian resident spouse, future capital gain, interest, and dividend income would attribute back to them.
  • This is designed to curtail shifting income to a lower income spouse.

Taxation of Janet’s Brokerage Account Without Additional Planning

  • As mentioned above, for Canadian tax purposes, Janet will be deemed to sell the assets within her brokerage account immediately prior to becoming a Canadian resident. She is then deemed to reacquire them.  As such, for Canadian tax purposes, she will then have a brokerage account with a value and cost basis of USD$3,000,000.  She has managed to avoid Canadian taxation on the unrealized gains.
  • However, she maintains the USD$2,000,000 cost basis for U.S. tax purposes, and she would still report USD$1,000,000 of capital gains on her U.S. tax return if she were to sell the assets. She has not avoided future U.S. taxation on the unrealized gains.
  • Her net worth for U.S. estate and gift tax purposes remains the same.

Goals of the Gifting Strategy
There are three potential goals related to this strategy.  The first goal is the main driver of the strategy for most individuals, while the two other goals may be applicable in certain situations.  They are as follows:

  • Avoid taxation of unrealized gains in both countries.
  • Do the above in a manner that avoids Canadian income tax attribution and allows for income splitting. This goal is more important for scenarios where the U.S. citizen is expected to be in a much higher Canadian tax bracket compared to the non-citizen spouse.
  • Reduce the net worth of the U.S. citizen spouse. For example, if the U.S. citizen was considering renouncing U.S. citizenship in the future, gifting assets could potentially be a means of reducing their net worth to avoid punitive expatriation tax rules. A full discussion of renouncing U.S. citizenship is outside the scope of this article.

Summary of the Gifting Strategy

  • Prior to July 1, 2021, Janet gifts John the assets contained in her brokerage account. Since she is below the U.S. estate and gift tax exemption amount, although she will be required to file a gift tax return, she will pay not pay gift tax.
  • Janet and John will relocate to Canada on July 1, 2021 and will become Canadian tax residents.
  • John will renounce his Green Card status and as such will expatriate shortly after moving to Canada by one of a couple methods. He will become a non-resident for U.S. tax purposes.
  • John will own his own brokerage account that will contain the assets that were gifted to him. This account will have a fair market value and cost basis of USD$3,000,000 for Canadian tax purposes.
    • Future capital gains realized within this account will not be subject to U.S. income tax, since John will no longer be considered a tax resident of the U.S.
  • The value of Janet’s estate has been reduced by USD$3,000,000.
  • The unrealized gains of USD$1,000,000 will avoid taxation in both countries.
  • Income splitting will be achieved.
    • Since Janet was not a Canadian resident at the time of the gift, the gift will not be subject to the Canadian attribution rules.
    • Income realized within the account in the future will be taxable to John at his lower marginal tax rates.

Additional Comments on the Gifting Strategy

  • If income splitting is an objective, the gift should take place prior to Canadian residency. In Janet and John’s situation, it was beneficial to shift income to John and as such it was important for the gift to take place prior to the move.  For two high income earning spouses, income splitting will be less of a concern.
  • A detailed analysis of the expatriation rules for Green Card holders is beyond the scope of this analysis, but here are a few clarifying details. For more information on the expatriate process please contact Cardinal Point or another qualified service provider.
    • John was able to avoid covered expatriate tax status because he was not considered a long-term resident. He owned his Green Card for less than 8 of the last 15 years.
    • If John had owned his Green Card for at least 8 of the last 15 years, further analysis would be required to determine the appropriateness of this strategy.
    • John could expatriate by filling out the required paperwork and handing in/mailing his Green Card to the proper authorities, or by filing a U.S. non-resident tax return with the proper treaty disclosure.
  • This strategy would be equally effective if the non-citizen spouse had a visa instead of a Green Card.

What if both Spouses hold Green Cards?

  • This strategy would have a different focus if both spouses held Green Cards.
    • The gifting would not be required to avoid taxation of unrealized capital gains if both spouses are able to avoid covered expatriate status when they become non-residents of the U.S.
      • However, it still may be worth gifting assets for income splitting purposes.
    • If one spouse can avoid covered expatriate status, then it might be worth gifting assets to that spouse in order taxation of unrealized gains.
    • It is very possible that neither individual is considered a U.S. resident for estate and gift purposed. A detailed analysis would be required to make this determination.  However, if this was the case, then gift tax considerations could be ignored.  This would allow more flexibility in gifting for very high net worth individuals.

The Cardinal Point Advantage
This article highlights the complexity and intricacy of planning for mixed citizenship marriages, and the importance of tax planning prior to relocating to another country.  When a U.S. citizen and their non-U.S. citizen spouse relocate to Canada, this gifting strategy potentially allows for significant tax savings on unrealized gains, for income splitting, and for an estate planning opportunity.  As mentioned earlier, the example used in in this article was simplified to focus on the strategy and its intended results.  The appropriateness of this strategy depends upon the case facts of each individual situation.  We highly recommend that you consult experts such as those employed by Cardinal Point prior to your relocation to Canada, and when considering whether this strategy is appropriate for you.

Cardinal Point has a unique team of cross-border tax, estate, financial planning, and investment management experts. Not only can we assist with planning for your move, we also have the registrations and ability to manage investment portfolios that include accounts in Canada and the United States.  We have the expertise to ensure that our clients can maintain retirement assets in their country of origin, and to transition other assets from one country to another in a tax-efficient manner. Our clients receive tax planning as a part of their overall financial plan.

Moving Across the Border and Leaving Your Aging Parents Behind

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Moving from one country to another, whether for work, retirement, or any other reason, often means leaving close family and friends behind. This decision can take on a special significance when those family members are your aging parents.

The growth of the U.S. population age 65 and older exceeds that of the total population and those under the age of 651. Over the next 20 years, Canada’s senior population — those age 65 and older — is expected to grow by 68 percent2.

As we all get older, the dynamics of our relationships with our parents change in many ways. One significant change is the level of dependency on their adult children that many parents may begin to have. This can take many forms, but whether it is help with groceries or medication reminders, lending assistance is generally more complex when you live farther away.

Moving Boxes

Summary and Takeaways

Taking care of older parents is significantly more complicated if you are moving to a different country. But the challenges may be mitigated by careful planning prior to your move. Give yourself plenty of time to discuss plans with your parents and put them into place while you’re still nearby. Family members, professional care providers, financial advisors, and others can be enlisted to help ensure that your parents have the attentive help they need in your absence.

Key Takeaways

  • Open and empathic communication with your parents is essential, because it may involve sensitive discussions to create contingency plans to support their needs in the event they become less independent.
  • But such conversations can potentially become much more difficult if you’re away or if they become ill or incapacitated. It is always best to have these discussions now versus later.
  • If you are designated with Power of Attorney over the affairs of your parents, it may be prudent and wise to appoint someone else who will be living close to your parents.
  • Organize any important legal and financial documents that your parents have, so that they can be accessed if necessary, by that person with Power of Attorney.

When you are first thinking about a major move, it’s important to consider whether a parent or other family member has delegated power to you within a Power of Attorney for Personal Care or a Power of Attorney for Property (or other similar documents, which vary by jurisdiction).  Being an attorney for property or personal care means that in the event that the person is unable to make their own care or financial decisions, you have been named as their choice to do so.

You would likely have been chosen based on family dynamics at the time the documents were prepared. However, this should be revisited prior to a move to ensure that the person who is currently the most appropriate choice is named and that person can continue to act in their named capacity. If the designated attorney doesn’t live nearby, personal care decisions can be difficult to make. If the named attorney does not live in the same jurisdiction as the parent, financial institutions may be unable or unwilling to take instructions.

Additional tax reporting on the part of the named attorney may also be required in the event of a cross-border move. Generally, appointments within a will should be reviewed as part of an overall estate plan discussion. Where possible, schedule a family discussion about these matters ahead of your move. If changes are not made before a parent’s condition deteriorates, it will be difficult, if not impossible, to make amendments or appoint a new attorney. Of course, if your parents don’t have these documents already in place, they should be strongly encouraged to have them drawn up. Otherwise, by the time the attorney is required to act, it is too late to do so.

Whether named as an attorney or not, most of us have a strong interest in seeing our parents live their best life possible. In most cases, the aging process means that there are changes in need and ability that can either creep up gradually or very suddenly in the event of an adverse health situation.

Keep in mind that your parents are adults with a lifetime of caring for themselves and making their own decisions. Their identity and self-respect may center on their role as parents and adults. If they feel they are losing control to others, they may resent and resist what they may see as efforts to rob them of their independence. There are no easy solutions, but open communication and allowing them look after themselves and make their own decisions, to the extent possible, is important.

Over time, and at different ages, most people will experience some decline in physical and/or cognitive capability. Staying in close contact with your parents may make it easier to become aware of these changes.  However, bear in mind that if changes occur gradually, they can actually be difficult to notice unless you are making a conscious effort to do so. It can also be helpful to stay in touch with local family members or friends who see your parents more often and may have somewhat different perceptions than you have at a distance.

These physical/cognitive declines in capability, as well as your parents’ responses to them, will dictate what type of help they need and will welcome, or at least accept. The particular combination of needs will develop over time and will be as individual as your parents are, based on their abilities and lifestyle. There could be difficulties keeping up with what is required for day-to-day life: housework, meal preparation, yard work, or paying bills on time. It could be that personal care will become an issue where support is required for grooming, dressing, medication, and other personal tasks. They may need support in running errands and attending appointments, even to the extent that they are no longer safe drivers. Modifications to the home might be needed such as grab bars or adjustments like removing rugs and other trip hazards. There may also be emotional support required by the parents whose lives are changing and by those providing primary care.

If you are the property attorney and working from afar, preparation is key. Set up online access where possible to facilitate future activity such as access to financial statements, medical records, and tax receipts. This may be easier to set up when you are local to your parents rather than at home across the border. Having the Power of Attorney document accepted by your parents’ institutions may require an in person visit as well, so contact the institution to determine what will be needed. This is a priority for critical providers such as the bank and insurance companies.

If your parents need help paying bills, setting up payments to run automatically, rather than requiring manual activity, will reduce the risk of missed payments as well as the amount of work required. Consolidation of accounts such as investment accounts or credit cards, where possible, will simplify their financial situation as well.

Create a place to store important information such as your parents’ SSNs, bank account and insurance policy details, and health card numbers so you have them handy as needed.  Include a list of payments being made manually and those that require periodic activity. It may be helpful to have copies of documents such as deeds, loan documents, investment statements, and insurance policy statements.

As needs increase over time, it becomes essential that providing support is a team effort consisting of local family members or friends, distant family members, and local community support services. It’s ideal to start the team approach early to avoid crisis situations such as preventable falls, dangerous neglect of health needs, or emotional burnout. If possible, reach out to your parents’ neighbors and exchange information, encouraging them to contact you if they have any concerns.

The family doctor is a key member of the team, providing an objective view of the situation.  Ensure that the Personal Care Attorney document is on file with the doctor and any specialists. Your parents’ doctor should also be able to point you in the direction of available community services. An assessment of your parents’ needs, to determine whether they qualify for any free or inexpensive support, may be available. If so, take advantage of that opportunity. Keep in mind that reassessment should be made periodically as their ability to manage their life independently changes over time. An assessment of the home environment with recommendations to improve safety and comfort is also valuable if this is offered by community services in their area.

Depending on financial resources, a wide range of services are likely available for both household and personal help. Starting to engage help early, when the help required is less invasive (such as yard work rather than meal preparation), may make it easier for independent-minded parents to accept.

Whether paid help is accessible or not, family members near and far need to work as a team, contributing what they are able to the parents’ care to avoid overburdening any one person. Anyone who offers to help should be given something to do, making them part of the team as needs evolve. This can include financial, logistical, and emotional support that may be easier to provide from afar in addition to tasks that must be done in person.

As much as it takes a village to raise a child, it takes a community of people working together to support family members who are no longer able to live as independently as they once did. We encourage you to work with your family and within your parents’ community to ensure that they continue to live well as their life evolves.

Through our financial planning process, Cardinal Point assists clients and their families by reviewing estate plans, including appointments in place, and outlining strategies to assist all parties.

1 https://www.census.gov/library/stories/2018/10/snapshot-fast-growing-us-older-population.html

2 https://www.cihi.ca/en/infographic-canadas-seniors-population-outlook-uncharted-territory

Estate Disputes: Keeping the Peace

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Estate planning issues can create family discord, especially in cases in which there is a sizable inheritance and heirs have disparate circumstances and competing interests.

“You seem to know people,” says Terry Ritchie, director of cross border wealth services with Cardinal Point Capital Management Inc. in Calgary, “but when someone dies and there’s money [involved], their real colours come through.”

Managing delicate family dynamics can be challenging, Ritchie adds, but there is much you can do as a financial advisor to prevent and minimize potential conflict. Ritchie offers the following advice for helping clients keep family peace before and during a wealth transfer:

Encourage open dialogue

Ritchie recommends hosting a family meeting that includes the client and all the beneficiaries of the estate as part of the estate planning process. Heirs who are unable to attend in person can connect by speaker phone or online. The conversation should cover how the wealth transfer will unfold and issues unique to that case that might arise.

As the financial advisor, you are in a position to address family members’ questions about the ins and outs of the wealth transfer. For example, you can field questions that may arise regarding taxes, which can complicate the process, especially if there are cross-border tax issues.

But the level of disclosure you get into — such as the client’s net worth and the distribution of assets — is your client’s call. Ritchie lets his clients decide whether it makes sense for him, as the advisor, to communicate with the family. Once he has the approval to engage the family, he is careful to treat the children equally and be up-front about how he’s helping their parents.

Improve your client knowledge

Expand the scope of your discovery process to include getting to know your clients’ family dynamics. Ritchie usually holds an in-depth conversation with clients about how their children are faring, asking if there are any issues he should be aware of that could complicate the wealth transfer.

For example, Ritchie becomes attuned to the marital status and financial circumstances of his clients’ children, which helps him get a better sense of their motivations. By becoming familiar with your clients’ children, you create an opportunity to continue a relationship with that generation.

“I have a pretty good understanding of the cast of characters I might be dealing with in the future,” Ritchie says. “Many advisors don’t go that deep.”

Take the heat

If your client feels caught in the middle of an intractable sibling rivalry over the inheritance, Ritchie says, help ease the stress by acting as an intermediary.

He has faced situations in which clients’ children want to dictate the terms of how and when the assets will be distributed. In one case, one sibling felt that the wealth was being divided unfairly, because others were receiving a larger portion to include their children.

In such cases, Ritchie will take on the role of “bad cop,” enforcing the client’s expressed wishes and explaining the reasons behind the decision.

When the children prove relentless in pushing for their preferences, he often tells his clients: “Don’t be the bad guy, let me be the bad guy.”