Estates & Wills & Trusts

Women should assume key role in long-term wealth, estate planning

By AdvocateDaily.com Staff

With high marital breakdown rates and a longer lifespan, 90 per cent of women will be solely responsible for their finances at some point in their lives, but all too often, in a male-female relationship, responsibility for wealth and estate planning falls to the male partner — which is problematic, Toronto estates and trusts lawyer Suzana Popovic-Montag writes in The Lawyer’s Daily.

As Popovic-Montag, managing partner of Hull & Hull LLP explains, recent research shows that significant disparities in both financial literacy and confidence remain between Canadian men and women, with only 48 per cent of women reporting that they feel confident in their knowledge of wealth and money topics, compared with 65 per cent of men.

At the same time, she says, a recent RBC report also refers to "the upcoming historical wealth transfer taking place over the coming decades," with many women potentially becoming "double inheritors."

Although it is worth noting that self-reported assessments of male and female capabilities are not necessarily reflective of the actual aptitude men and women have in handling financial matters, Popovic-Montag says the fact remains that this confidence gap, whether based in reality or not, has significant implications, particularly for women.

“Women’s lack of involvement in family financial matters has consequences that are twofold when it comes to estate planning. First, the less knowledgeable clients are about their assets, the harder it is to plan for their effective transition. And second, the less knowledgeable clients are about family finances, the less equipped they are to manage an inheritance,” she writes.

Popovic-Montag says many women will inherit money twice — once from their parents and once from their spouse — and inheritances are major financial events that can involve a number of decisions and planning changes.

Given that knowledge and good advice are critical in these situations, there are ways lawyers can help address this gap in financial involvement during the estate-planning process, she says.

For example, says Popovic-Montag, emphasize the importance of speaking to an estate solicitor as a couple.

“Meeting with both partners from the outset ensures that if a spouse dies, the surviving partner will have less new information to tackle. Remember that those inheriting wealth effectively become the personal wealth managers of these bequests, often with little notice and at a time of great emotional upheaval. Preparation can make this transition more manageable.”

Lawyers also need to get a firm grasp on family financial dynamics, she says.

“Make sure you know which party or parties ‘run the show’ when it comes to family finances. Ensure that surviving spouses and presumptive heirs are equipped with the necessary information to manage matters should the show runners die.”

Keeping a will up to date is also critical, says Popovic-Montag, especially in the event of a divorce.

“Make sure your client understands the importance of getting in touch as soon as possible if there’s a change in marital status.”

It is also important to keep an eye out for common stumbling blocks, as confusion regarding life insurance policy designations or the right of survivorship for joint bank accounts can lead to big headaches down the line, says Popovic-Montag.

“Ensure bequests for life insurance are sufficiently specific, and match the designation on the policy itself,” she adds.

Ultimately, lawyers should also advise clients to get involved sooner, not later.

“Women not currently active in long-term wealth planning for themselves and their families need to participate. It’s their future and, at some point, it’s likely to be a future on their own. It’s important to ensure it’s a secure one,” she adds.

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