Survey: Majority of Canadians don't understand what happens to their debt when they die

Leaving a financial legacy is a key goal

TORONTO, June 24, 2013 /CNW/ - The majority  of Canadian adults (67 per cent) either don't know what will happen to their debt when they die, or are misinformed about how their debt will be treated upon their passing, according to a survey of 1,500 Canadians released today by Lawyers' Professional Indemnity Company (LAWPRO). The survey provides data about Canadians' understanding of debt and death. It reveals a significant knowledge gap - only one third of Canadians understand how their assets and debt will be managed when they die.

"Debt and death are sensitive and sometimes uncomfortable subjects to consider, but clarifying how your assets and debts will be treated upon your passing can provide peace of mind and help you understand how loved ones will be impacted," said Ray Leclair, Vice-President, Public Affairs at LAWPRO. "Over half of Canadians would like to help their family be more financially comfortable when they pass away - a lawyer can provide advice and guidance to help make this legacy a reality."

Interestingly, age and experience aren't predictors of financial and legal understanding of debt and death issues - 42 per cent of Canadians aged 55+ are misinformed about what happens to their debt when they die - the largest percentage across the demographic groups.

Survey data showed a wide gulf between people who want to leave their families in financial comfort (56 per cent), and those who would like to leave other types of legacies: 12 per cent of people wished to leave a lasting impact on others instead of a financial contribution; 11 per cent wanted their prized possessions left to very specific beneficiaries and organizations, and three per cent wanted to leave money to their favourite charity/charities or create an endowment fund. Two per cent of Canadians responded that they have non-traditional ideas for their legacy, including giving assets to friends and providing funds to care for their family pet. Alternately, some planned to simply spend all their money before they died.

Some Canadians had not thought about the legacy they wanted to leave when they passed (15 per cent), while others declared that they felt comfortable passing with debt on the books (12 per cent). A number of people surveyed believe that life and mortgage insurance policies would cover outstanding debt, which alleviated their concerns.

Home owners more educated about death and debt

Home owners have greater awareness about what happens to their debts when they die and are more inclined to leave a financial legacy to family, compared to renters. While 37 per cent of home owners understood how their debts would be treated upon their passing, only 28 per cent of renters knew. Furthermore, 62 per cent of home owners surveyed wished to help their families be more financially comfortable upon their death, versus 48 per cent of renters and 30 per cent of people in other living situations.

"When people consult a lawyer when purchasing a home, one of their largest investments, discussions often arise about getting a will and estate planning," adds Leclair.

Men better informed than women

The survey also showed that 32 per cent of women simply don't know what happens to their debt when they die, compared to only 24 per cent of men. Overall, men are more informed about how their assets and debt will be dealt with after death, with 37 per cent of men understanding the process, versus 30 per cent of women.

Joint ownership and outstanding loans are often misunderstood

Nearly two thirds of Canadians (65 per cent) don't appreciate the risks of having assets in joint ownership with children or others before their death. Also, one third of Canadians don't know what happens to loans to children/heirs or others upon their death.

Before sharing assets with a child, parent or relative, a lawyer should be consulted to better understand how ownership rights could be impacted by other debt obligations.

Additional survey findings:

- People with children were more inclined towards leaving a financial legacy - 66 per cent of people with children cited this goal, compared to 53 per cent of people without children.

- When asked what their greatest worry about leaving debt behind after death was, some of the more interesting individual responses were: "dead people don't worry" and "more worried about being totally broke before I die."

Canadians can find a lawyer through a variety of sources:

- Referrals from friends and family

- By looking up a lawyer in a directory maintained by a provincial law society

- Workplace benefit programs often provide lawyer referrals through Employee Assistance Programs (EAPs)

- The locate-a-lawyer feature for obtaining referrals to real estate lawyers on the TitlePLUS website,


Lawyers' Professional Indemnity Company (LAWPRO®) is owned by the Law Society of Upper Canada and licensed to provide professional liability insurance and title insurance in numerous jurisdictions across Canada. Through its malpractice insurance program, LAWPRO insures about 25,000 practising lawyers in Ontario, as well as providing them with risk and practice management programs to assist them in their law practices under the practicePRO® banner. LAWPRO's TitlePLUS® title insurance program is available to more than 4,500 lawyers across Canada and Quebec notaries to better meet their clients' needs for professional legal advice and superior protection for their real estate transactions.

From April 11th to 12th 2013 an online survey was conducted among 1,500 randomly selected Canadian adults who are Angus Reid Forum panelists. The margin of error—which measures sampling variability—is +/- 2.5%, 19 times out of 20. The results have been statistically weighted according to region (and in Quebec language), gender, age, income, and education Census data to ensure a sample representative of the entire adult population of Canada. Discrepancies in or between totals are due to rounding.


For further information:

Davina Ramnarine
Hill+Knowlton Strategies for LAWPRO

Mary Warner
Hill+Knowlton Strategies for LAWPRO

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