The intended beneficiaries of the wealthiest people in Canada may see the government claim the lion’s share of their inheritances, because they lack proper estate plans, according to an RBC Investments/Ipsos-Reid wealth management survey.

The survey of the most affluent 20% of Canadian households demonstrates that 70% have not developed a written plan for the financial management of their estate after their death, leaving the door open for the government to become their major beneficiary.

“Talking about the inevitable may not be pleasant, but dealing with it accordingly can eliminate a lot of grief,” says Jo-Anne Ryan, senior advisor, RBC Investments. “Tax efficient investing, estate planning, and preparing one’s beneficiaries for what lies ahead is imperative for anyone who wants to take care of their family properly after they’re gone.”

While 48% of individuals with $100,000 or more to invest have a specialized tax advisor and 86% have a will, less than one third (30%) have a written plan for how their estate will be managed after their death. Of this group, less than half have included tax plans; the number with business succession plans is even smaller at 14%.

A will is just part of an overall estate plan that ensures liabilities and probate fees are kept to a minimum, so that a greater portion of the estate may be left to family, friends or charities. Trusts, insurance and charitable giving strategies are some of the ways that a well thought out estate plan can help Canadians ensure their wealth is passed on to the hands they choose.

“We are in the midst of the largest inter-generational wealth transfer in history,” says John Hamilton, vice-president and director, RBC Global Private Banking, Trust Services. “Efficient estate planning, including tax and succession planning will play a significant role in determining what happens to that wealth. Right now the next generation could be faced with the government claiming significant portions of their inheritance.”

These findings are from an Ipsos-Reid/RBC Investments poll conducted between February 7 and February 24, 2002. The poll is based on telephone interviews with 1,000 Canadians 18 years of age or older with more than $100,000 in financial assets excluding principle residence, property, jewellery, or art work.

With a sample of this size, the results are considered accurate to within (+/-) 3.1 percentage points, 19 times out of 20.