What the ‘most strategic advisors’ are doing to facilitate wealth transfers

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We’ve all heard the saying about how children become their parents. Unfortunately, that may not be a good thing when it comes to estate planning.
Thomas William Deans, author of The Happy Inheritor: How Successful Families Prepare Heirs and Transfer Wealth in Toronto, has found that many baby boomers have followed their parents’ lead by staying silent about financial matters.
He notes some sobering data about the lack of wills drafted by Canadian adults. Eighteen years ago, when Mr. Deans wrote his first family wealth book, 12 million Canadians didn’t have a will. Today, that number has increased to 15 million.
Mr. Deans spoke recently with Globe Advisor about this issue.
Why are people still not getting the urgency of drafting wills?
We tend to think transferring wealth is something that we will do when we get old – just before we die. We all think we know the best moment. But the reality is we don’t know. My book was born out of trying to decode what is going on. Why are people avoiding what we know is a certainty – our ultimate death and the transition of our wealth?
Some parents are thinking about transferring their wealth – they’re giving their children an early inheritance so they can afford a house.
That’s a bright spot in transferring wealth because it opens up larger family conversations. The best part is givers get to watch and enjoy what their hard-earned wealth can do. Grandparents and parents have realized that hoarding wealth until the end of their lives and leaving it to their adult children – who are in their 60s and 70s – is not serving anyone.
Are there dangers to receiving these early gifts?
Family secrets around these gifts can cause serious problems. Someone might receive money for their mortgage down payment but then be told, “Don’t tell your brother.” People get hurt when they learn someone got money. That’s why families need to talk honestly and transparently about the transfer of wealth. The alternative, quite frankly, is chaos. The estate courts are full of families in litigation.
How can advisors assist with wealth transfers?
The most strategic advisors are facilitating family meetings to get to know the next generation. They’re managing living gift discussions and having meaningful conversations about philanthropy. They’re also encouraging parents and grandparents to open investment accounts for their children or grandchildren and offering to work with them directly to teach them about investing.
This interview has been edited and condensed.
– Deanne Gage, Globe Advisor reporter
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A broad basket of commodity prices has been tumbling for months, fuelled by concerns about slower growth in the world’s two largest economies, though so far, the pain has been overshadowed by fears about the equity sector sell-off. Should the commodity rout drag on, Canadians will have to pay attention, because the country’s resource-heavy stock market and economy will be at the centre of any fallout. Tim Kiladze reports.
– Globe Advisor Staff