Many people wait until they've experienced a painful loss before assembling a death binder with instructions for loved ones.DNY59/iStockPhoto / Getty Images
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Death binders are emergency manuals for surviving family members to explain the finances, household chores and other logistics for when the binder’s author is no longer around. The documents are also invaluable to executors managing the deceased’s estate.
But setting them up isn’t easy. Many clients are spent after drafting wills, powers of attorney and lists of important contacts, not to mention gathering all of their government documents, investment and insurance statements, and household bills.
Christine Brunsden, president and trusts and estate practitioner at Trusted Legacy Consulting Corp. in Burlington, Ont., works on extensive organizers for her clients and consults with several financial institutions on how to proceed. Ms. Brunsden spoke recently with Globe Advisor on the matter.
When do people tend to start compiling death binders?
Many people often wait to set up a binder when they’ve experienced a painful loss – either when the brush of mortality comes close or they see more years behind them than ahead of them. They’re just not going to tackle it unless they understand the benefits and are sufficiently motivated to overcome their procrastination.
Putting a binder together is such a daunting process. How do you help clients get it finished?
It’s like anything else: if you set the intention and say you want the binder done in the next six months, then we can set out a schedule to do virtual events and talk about the what, why and how to plan. But if advisors are just leaving materials for their clients to put together themselves without any direction, the binder is definitely going to get pushed aside.
A legacy mission statement is the first thing we start with. I have one for my business and also a personal one. It’s on a piece of paper by my bedside. I review it every single night and try to make sure I’m still living that legacy. It’s all about the principles and values that are important to you. The binder should be designed around how you want to be looked after while you are living but not capable and the things you want to happen when you’re no longer here to give direction.
What other things do advisors tend to neglect when setting up death binders?
They may forget to include information about advanced care directives. Is the person going to use free resources available through different organizations? Or do they want to hire assisted help? Many people do have ideas about how they want to be living as they age. Living arrangement preferences should also be included. If a power of attorney or executor is going to step into somebody’s life, either in life or upon death, they need to know these things.
Why do you think people are becoming more receptive to death binders?
For starters, dementia is on the rise. One in four working people today are a caregiver and we’re going to see that number rise to one in two quickly. People are starting to feel the pain of being a caregiver.
This interview has been edited and condensed.
– Deanne Gage, Globe Advisor reporter
Must-reads from Globe Advisor this week
Why advisors must avoid taking on these forbidden roles for clients
Advisors may be a logical choice to serve as a client’s executor or power of attorney, but doing so creates a major conflict of interest – and regulators are taking notice. A recent case underscores how important it is for advisors to steer clear of taking on such roles for clients. And if it happens without the advisor’s knowledge, they should inform their supervisor and compliance team as soon as they find out. “It’s a clear conflict of interest,” says Ellen Bessner, partner at Babin Bessner Spry LLP in Toronto. “If they’re able to be the power of attorney and the executor as well as the advisor … they have access to the client’s money and full authority to do what they want, with no checks and balances.” Alison MacAlpine reports.
Letters of wishes, videos help clarify estate planning decisions
To reduce family infighting over inheritances, more clients are writing letters of wishes as part of their estate plans to clarify their intentions. These letters explain how and why the client divided their assets the way they did, which may look inequitable to the heirs. David Burnie, certified financial planner at Ryan Lamontagne Inc. in Ottawa, says some clients have also moved beyond letters to record video statements. “They allow people to express their desires and communicate their values and philosophies on the distributions,” he says. “But the fact that it’s not legally binding needs to be expressed to the client.” Deanne Gage reports.
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Advisors can add value for clients and their heirs by using insurance strategies to keep wealth in a family. That has become even more important after the recent hike to the capital gains inclusion rate. The move has refocused attention on efficient means to limit tax obligations on major transactions, including wealth transfers as part of estates. “Tax-free cash is much more valuable now,” says Kathryn Del Greco, senior investment advisor with Del Greco Wealth Management at TD Wealth Private Investment Advice in Toronto. Jamie Sturgeon reports.
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Grandparents are increasingly paying for their children and grandchildren’s everyday expenses, and it’s causing them to worry about whether they’ll have enough money left over to remain financially comfortable in retirement, according to a new poll from Royal Bank of Canada. The survey of 1,508 grandparents aged 55 or older found that 21 per cent of participants are supporting a child financially, and 30 per cent have provided money to a grandchild, sometimes for everyday living costs or for their education costs. Salmaan Farooqui reports.
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– Globe Advisor Staff