Estate Planning Trends – 2021
by: Veronica Manski
In the not-so-new era of masked encounters and sanitized surfaces, many of us are still acutely aware of our vulnerabilities as we await the vaccine roll-out. Those who are young and healthy have only their liberty at stake and look forward to returning to their pre-COVID lifestyle. Those who are older or who have compromised immune systems or other health challenges have their lives at stake. They wait patiently for their turn to be vaccinated if only to feel safe again, and able to interact with their family, friends and members of their community. We all look forward to returning back to some sense of normalcy.
One thing that COVID has given us is time to think. In between watching endless Netflix shows and playing with our new cats and dogs, it’s important not to forget to revisit our incapacity and estate plans to make sure they still fit with our circumstances and wishes. The lack of certainty about the future means it is important to make sure your documents are in place and up-to-date. While you cannot control what happens next, you can plan for it.
In the conversations we are having with our clients over Zoom, we often find ourselves discussing the same reasons for wanting to update wills:
“It’s time I incorporated some gifts to charity.”
Charitable giving has become more prevalent in our clients’ estate plans. Giving feels good, and it also offers favourable tax benefits. Many clients wish to leave a legacy and make a difference, in addition to providing for family. Options include leaving cash gifts or specific gifts of property (such as publicly traded securities), leaving a charity or group of charities a portion of residue, establishing a charitable trust inside or outside of the will, and leaving a gift to a private giving fund established during lifetime. An important first step is to identify the causes and charities you wish to benefit most. Then, speak with your lawyer, accountant and/or financial advisor about the available options for achieving your charitable giving objectives.
“I’m going to help one of my kids buy a house,
and I need that reflected in the will.”
Real estate prices in Vancouver – specifically within the detached house market – have been on a tear. For sellers, it’s good news, especially for older clients wishing to downsize. For buyers, it’s bad news. Young people are being priced out of the detached housing market, making it more expensive and impractical for young families to call Vancouver home. For estate planning clients, it may mean giving cash gifts during lifetime to assist children with buying homes, which then requires updating the will to incorporate an equalizing, hotchpot clause. Or it may mean leaving gifts to children in wills in the hopes that they will be able to get into the market down the road. Some clients wish to give an interest-free mortgage. Each option has advantages and disadvantages that should be considered.
“I want to leave something for my daughter-in-law.”
Where children have been in long-standing, stable relationships, many clients are incorporating gifts to the child’s spouse. In many families, the son- or daughter-in-law becomes a loved and trusted member of the family. Why not leave a gift to the couple jointly, so that if either has passed away, the gift can be made to the survivor. Or, consider splitting the gift between spouse and grandchildren if your child predeceases. For example, the will might say “I direct my Executor to give 1/3 of the residue of estate to my son, Bob, but if he predeceases me, give half of his share to his spouse, Susan, and the other half equally to their children”. Long-standing, happy marriages cause many clients to revise their will to incorporate gifts to their children’s spouses.
“The grandchildren are a little bit older now and
I’d like to set aside something just for them.”
Finally, as family wealth continues to grow, clients are increasingly choosing to leave a portion of their estate outright or in trust for grandchildren. Many clients feel their children are already getting more than they need, so why not leave a portion to the grandchildren, to help them with school and buying first properties. Some clients wish to leave grandchildren a cash gift, while others prefer to give a portion of the residue. For example, the will might say “I direct my Executor to divide the residue of my estate into 5 shares, with one share going to [each of my 4 children] and the 5th share divided equally among my living grandchildren”. It has the benefit of avoiding additional probate fees that would be paid on assets that would otherwise be left to the same grandchildren when their parents pass away.
The above are some of the trends we’re seeing, which may be of interest to many of our existing or potential estate planning clients. We would be happy to discuss how we can help you to prepare a will that reflects your wishes and objectives, but let’s meet first over Zoom!