RBC Insurance warns failure to plan estates creates hardship, taxes, and confusion for loved ones
More than half of Canadians could be setting up their loved ones for financial distress.
According to Yahoo Finance, many Canadians are avoiding estate planning, even though doing so can ease administrative burdens, lower taxes and fees, and provide clarity during emotionally difficult times.
Adam Mamdani, vice president of RBC Insurance, said the biggest mistake people make is simply not having a plan — “Not having a will, not having power of attorneys, not having named beneficiaries, not having an executor, those are the biggest mistakes.”
A survey by the Angus Reid Institute found that 71 percent of Canadians aged 65 and over have an up-to-date will. However, only 49 percent of those aged 55 to 64 do, and just 23 percent in the 35 to 44 age bracket.
Among those who had a will, one in eight reported it was outdated.
According to a separate RBC Insurance survey cited by Wealth Professional, only 24 percent of Canadians over age 65 have a full estate plan, a number that drops to 15 percent among the general adult population.
Six biggest estate planning mistakes
According to Yahoo Finance, Mamdani outlined six key mistakes that Canadians make when it comes to end-of-life planning:
1. Not making time to create a plan
Mamdani said many Canadians avoid conversations around estate planning. “We don’t like to think about end-of-life or about planning for your passing. We kind of live for today and in the moment,” he said.
However, avoiding this planning creates difficulties for those left behind. “If you don’t have a plan in place, it’s going to be very difficult for people who have survived you — it’ll cause a lot of hardship for them.”
2. Not planning soon enough
“Too many Canadians are passing away without a will,” Mamdani said.
He recommended that Canadians begin planning as soon as they start accumulating assets or experience major life changes. “I always say you’re never too young to plan.”
3. Not considering your legacy
Estate planning involves more than deciding who gets which asset. It also includes considering long-term legacy goals.
“You’ve got to make sure your documents — will, power of attorney and named beneficiaries — are considering all your goals,” Mamdani said.
He added that people should consider charitable donations and intergenerational wealth transfers, along with their tax implications.
4. Overlooking the administrative burden
Managing an estate involves extensive paperwork. The executor must close bank accounts, pay off debts, and file taxes.
“You may want to consider having an organization or company named executor,” Mamdani said, noting that third-party executors can relieve loved ones of these responsibilities.
5. Underestimating estate fees
Mamdani advised Canadians to consider life insurance as a way to reduce estate costs.
“Life insurance in particular is a very important planning tool that can be used to help provide tax-free benefits to families so they’re not faced with high tax costs upon passing,” he said.
6. Not seeking advice from an expert
Mamdani stressed the importance of finding a trusted advisor. “Take the time to interview a couple of advisers – don’t just pick the one person you’ve spoken to.”
Without professional guidance, he warned, planning can lead to family conflict or legal issues.
For those with significant assets, especially baby boomers, estate planning is becoming urgent.
According to Wealth Professional, Andrew Gardiner, who joined Beneva after two decades in mutual funds, found that Canadians often underestimate the financial leakage that occurs without proper planning.
“Most Canadians don’t realize how much of their wealth can be eroded by taxes, legal fees, and delays in settling an estate,” he said.
Beneva's Investment Account Platform offers 100 percent death benefit protection at no extra cost.
Gardiner explained that this protection allows for wealth to be preserved without triggering capital gains taxes.
“Unlike most insurance carriers, we offer different levels of protection for non-registered accounts... without triggering a taxable event,” he said.
Gardiner said the flexibility to adjust protection up to age 85 helps clients increase estate protection over time.
He also highlighted Beneva’s Guaranteed Income Enhancer strategy, which combines annuities with life insurance to provide guaranteed income and after-tax estate benefits.
“It’s a way to provide income without market risk,” he added.
Advisors, Gardiner said, must begin involving family members in estate planning.
“Statistics show that if an advisor doesn’t know the client’s beneficiaries, the chances of retaining the assets under management when they transfer are close to zero.”
Selene Soo, director of product management at RBC Insurance, shared her personal experience with Wealth Professional.
She said her family faced challenges with probate and inheritance law after a relative passed away without a will. She sees this risk for many Canadians.
“As Canadians are continuing to age, that discussion around estate planning is going to happen a lot more with their financial and their insurance advisors,” she said.
Soo noted that life insurance and segregated funds can be tools to bypass probate and simplify transfers. She added that many Canadians believe they are too young or that the process is too expensive or complex.
But she stressed the importance of starting early: “Now,” she said, is when advisors should introduce estate planning to clients.
Advisors who support clients through this process can build stronger relationships and prepare for the coming intergenerational wealth transfer.
“Some upfront planning now can ensure that clients’ families and loved ones know what their final wishes are,” Soo said.
