Benjamin Franklin once said that there are only two certainties in life: death and taxes. While you are likely well-equipped to deal with the latter, the former can be a touchy subject to bring up with your clients.
“Typically, there aren’t many people who are keen to talk about death and dying,” says Christine Van Cauwenberghe, assistant vice president for tax and estate planning with Investors Group Inc. in Winnipeg. “But you have to couch it in a way that they will understand that to not talk about it would, in many ways, be selfish.”
While it is a conversation your clients do not likely want to have, it is an important one. And you have an important role to play in helping your clients ensure that they are financially prepared for death and for the death their spouse.
The key, Van Cauwenberghe says, is not to scare your clients, but to ensure they have a plan in place to help give them peace of mind. Once you have figured out how to best broach the subject with your clients, Van Cauwenberghe says, you should explore the following options with your clients:
> Make sure your clients are properly insured
The death of a spouse or loved one can mean the sudden loss of the survivor’s financial security. Making sure your clients are properly insured is a way to protect their standard of living.
“The most important time to discuss [insurance] planning is when they have young children, because they have the most at stake,” Van Cauwenberghe says. “You don’t want to see your clients with several children and not two nickels to scratch together because you didn’t help them plan ahead.”
> Consider their credit
Talk to your clients about their financial arrangements and responsibilities. Who is the family breadwinner? Does one partner stay at home to raise the family?
It could be possible, Van Cauwenberghe says, that the partner who stays at home might not have a sufficient credit history or adequate sources of income should the other partner die unexpectedly.
“Get them a credit rating,” Van Cauwenberghe says, “so one isn’t left in the lurch.”
> Prepare an estate plan
Ensure that your clients have a will prepared and have named an executor — whether sole or joint. This is particularly important, Van Cauwenberghe says, because of the evolution of blended families in Canada.
“Couples don’t necessarily always have objectives that are completely complimentary to one another,” Van Cauwenberghe says. “If a spouse doesn’t understand what they may or may not get at the time of their partner’s death, they may be operating under the assumption that they are going to be getting a lot more than they are entitled to.”
> Contact lawyers
If you are involved in estate planning, it is important to contact your client’s lawyer, who will be involved in drawing up the will.
Make sure that what you are doing as a financial advisor is consistent with what the client’s lawyer is doing.
“That’s where we have the most problems,” Van Cauwenberghe says. “We can’t have people operating in silos.”