Win-win resolutions are what we strive to achieve in every client interaction. Sometimes, when a third party is involved in a client interaction, we have the opportunity to go even further, and end up with a win-win-win situation.
This happened recently in an interaction with an Investment Industry Regulatory Organization of Canada (IIROC) advisor who had an incapacitated elderly client. Fortunately, the client had the foresight to appoint a power of attorney prior to their incapacitation, meaning her finances were in good hands in the event that she became unable to manage them herself. When this unfortunately occurred, her attorney — a trusted individual whom she had known for decades — was well-positioned to explore options to transfer the client’s investments (or assets) in the event of her death to her intended beneficiary on a timelier and more cost-effective basis.
However, estate planning and wealth transfer is anything but simple – it can involve lawyers, creditors, accountants and even the legal system, not to mention that it can take large amounts of time and can involve significant administrative fees. This was likely more than the attorney, who was also the executor, could take on. For that reason, the IIROC advisor brought up the idea of a segregated fund product, which is an investment, a type of insurance product, and an estate planning tool all in one. While there are many benefits to this under-the-radar solution, in this case, its ability to speed up the wealth transfer from the client to the intended recipient and to avoid probate¹ and the resulting delays and fees, all with the benefit of simplifying the estate administration process, were major benefits to the attorney and the beneficiary.
The decision was made to bring in the head of Manulife Investment Management’s Tax, Retirement, and Estate Planning Services to consult and inform the attorney on how a segregated fund works and to help set it up in the client’s name as the rules vary by province. Manulife’s transactions team put the wheels in motion, working with the IIROC advisor’s back office to quickly and seamlessly make sure that this sizeable segregated fund was set up with the proper owner, annuitant and beneficiary, effectively making sure of a smooth transfer of funds in the future.
However, the story doesn’t end there. With a newfound understanding and appreciation of segregated funds and their ability to simplify the estate planning process, the attorney actually invested a significant sum of their own money in their own segregated fund as well. So, at the end of the day, the client’s funds are well-taken care of, the advisor has satisfied his responsibilities to his client, and an interested third party is enlightened to and invests in a new investment product that can serve his needs. Truly a win-win-win situation.
If you find yourself in a situation where a power of attorney is acting for a client and want to learn more about their options please reach out to your Manulife Investment Management sales team.
1 The probate process and fees do not apply in Quebec. There is a verification process for non-notarial wills but not for notarial wills.
This media is for information purposes only and is not intended to provide specific financial, tax, legal, accounting or other advice and should not be relied upon in that regard. Many of the issues discussed will vary by province. Individuals should seek the advice of professionals to ensure that any action taken with respect to this information is appropriate to their specific situation. E & O E. Any amount that is allocated to a segregated fund is invested at the risk of the contractholder and may increase or decrease in value.