Inflation and market volatility continue to hammer at Canadians’ spending and savings. When it comes to estate planning, a large majority want to maximise the inheritance left to their loved ones, be it by avoiding unnecessary estate fees (87%) or minimising out-of-pocket settlement costs (86%) according to a recent survey by RBC Insurance. This is particularly true among those 55+ (93% and 91% respectively).

However, RBC research suggests there is a lack of planning and prioritisation among Canadians when it comes to preparing their estate. This not only jeopardizes the value of the inheritance but also places potential hardship on beneficiaries.

“Estate plans are important to ensure loved ones aren’t left feeling overwhelmed when managing your end-of-life finances,” says Selene Soo, director of Wealth Products for RBC Insurance. “This includes paying out-of-pocket for funeral arrangements, mortgage payments, utility bills, and lawyer fees, among other things.”

Inheritance planning-RBC research key takeaways

Many Canadians don’t have a clear understanding of what happens to their money after they die. This reveals a lack of knowledge about important aspects of wills and estate planning:

  • 61% don’t feel knowledgeable about or have never heard of the probate process;
  • 62% don’t know that having a will does not prevent an estate from being taxed after death;
  • 57% aren’t aware that estate taxes may be reduced by insurance policy benefits, which offer opportunities for your inheritance to bypass probate

This awareness gap makes it more difficult for Canadians to set up their estate advantageously through financial products and services that can help to leave the legacy they intended. For example, only 25% say they are knowledgeable about segregated funds. This is an investment solution that can help maximise an inheritance by reducing estate fees, since the funds bypass probate and are paid directly to an appropriate named beneficiary.