Rich person enjoy money

A supposed “wealth transfer” is occurring. How do rich people pass on their fortunes to their heirs? What can you learn from them?

A whopping $84 trillion in assets will trickle down to Millennials and Generation X. Families should (hopefully) put a lot of thought and planning into how that wealth will be passed down.

This is even more true for uber-wealthy families.

It’s no secret that Millennials and Generation Z are two generations that have been beset with financial and economic struggles: student loans, high inflation, housing, and low job prospects all paint a bleak economic future for both generations. This is why many members of the younger generations are scrambling to make money through “side hustles,” living with roommates for a lot longer, live longer at home, and scrimp and save as much as possible.

The Importance of Estate Planning

The most common challenges

Family Dynamics

Wealth Succession

Other Things

Family Relationships

Philanthropic Giving

Financial Education

Life Insurance

Estate Tax

Wealth Transfer

Passing on wealth to the next generation

This is where the importance of passing down your inheritance comes in:

For a lucky few (we’re talking a very small minority of people on the planet), they have had the good fortune to inherit wealth. The small minority of lucky (wealthy) Millennials and members of GenZ may face other problems when it comes to receiving their assets: they may inherit less than they actually believe. Taxes and other estate fees may eat up their inheritance. Here is how you can learn from the uber wealthy: a study of 270 individuals from families with $50 million showed that some of the most important lessons on wealth planning are as follows:  

The most Common Challenges in Wealth Succession

Managing tax liabilities while transferring your assets can significantly impact (i.e. diminish) the wealth passed on to heirs. This means that proper estate planning and a good strategy for passing down wealth is of the utmost importance. In fact, 33% of respondents to a survey said that COVID-19 lead to more frequent conversations about their familial wealth.

78% of people reported having unplanned conversations about wealth, which didn’t go well at all. 26% of of those respondents actually regretted having those conversations. Ouch!

Managing Family dynamics:

The above stat shows why families with strained relationships, conflicting values, and differing values all complicate the process of transferring wealth. This is where the strategies for successful wealth succession comes in: asset preservation, safeguarding your assets from economic downturns, and preparing your heirs for the future are all important (it’s especially important in this day and age, where inflation is at 40-year high.)

Strategies for Successful Wealth Succession:

Estate planning is the basic cornerstone of wealth succession for affluent families (and not-so-affluent families.) This involves creating a comprehensive strategy to manage and distribute assets upon death (or in some cases, while the heirs are alive – which you can read about here.)

Wills: This is a no-brainer: everyone should have a Last Will and Testament, and if you need a basic Last Will drawn up, see here as to how we can help you with that. These are legally-binding documents to help specify how your assets should be distributed and managed upon your death.

Other things an Estate Plan should include:

Asset protection: optimize your tax strategy by utilizing tax-efficient strategies to minimize estate taxes. That will allow you to maximize your wealth and increase the amount of money that your loved ones get. That may include receiving professional financial advice, if you need it.

Family Relationships:

This should be a no-brainer, but having these conversations about money can elicit feelings of anger, sadness, confusion, etc. If you’re going to sit down and have these (uncomfortable) conversations about money, you’d better be prepared for some crying, anger (possibly screaming, yelling), and maybe even threats of physical violence. One way to handle this is through annual family meetings: gather everyone to discuss your plans for your estate, your long-term goals, and how you want your things to be handled upon your death. A good discussion to air things out may help clear the air of any ambiguity regarding your estate.

Philanthropy and Charitable Giving:

Many affluent families engage in philanthropy: they pass on their money to worthy charitable causes. This is their way of leaving behind a positive impact on society upon their deaths. You can see this with wealthy celebrities who have left everything to charity, rather than to loved ones. There are celebrities who believe that their own children should work for their own money (usually with the help of their parent’s connections, of course.) Funneling money through family foundations or through charitable trusts can seamlessly support charitable causes, and get the heirs involved in charitable giving. In other words, having your heirs involved in charitable giving and distributing that money may keep the children of the uber-wealthy from being spoiled brats who live off of their inheritance.

Financial Education and Mentorship:

Rich people, just like everyone else, don’t want to see their wealth squandered. They may also prepare the younger generation with lessons about financial literacy at a young age. Of course, this involves networking and connections (probably connections that many of us don’t have.)

Life Insurance:

Life insurance can serve as an effective tool for wealth succession. It’s pretty much a viable tax-efficient way to transfer wealth to heirs. Life Insurance can also be used as a way to pay off taxes on real estate.

Estate Tax Planning:

Estate taxes can significantly eat away at the wealth people have accumulated into your estate. For wealthy people, this is where estate planning attorneys/tax expert come into play: they help minimize tax liabilities. That isn’t what you want, right? You may want to do the same, and talk to an estate planning lawyer when you are settling your estate. You may also want to start with our estate planning articles, here.

Wealth Transfer Laws:

Wealthy families have to stay informed about new laws and tax regulations. They adapt and adjust plans accordingly. Regardless of your income level, you should follow suit and adapt by staying informed with the laws surrounding tax regulations.

Preparing the next generation:

Rich people don’t want their money to be blown – there is some evidence to show that by the third generation, inherited wealth ends up squandered. You too, can avoid having your money (and estate) squandered by emphasizing the importance of your heirs (and their children) about managing their money, consistently educating themselves on changes to the laws, and learning how to spend money wisely.

You can start this entire journey by creating a Will, Power of Attorney or a Living Will for yourself. You can start here. Wealth succession is a complicated journey that goes beyond the transfer of financial assets. You have to balance your assets, estate, family relations, philanthropy, etc. Managing all of this almost appears to be a full-time job. You can learn from wealthy families by making sure that your own heirs are up for the job.

A romantic couple

When do you need to update your Will? Estate planning is an ever-evolving process that adjusts and adapts to the ebbs and flows of our lives. Central to this is your Last Will and Testament. But creating a Will isn’t a one-time affair; life’s unpredictability demands regular revisions. So, how do you know when it’s time to dust off that old document and make some changes? Let’s dive in.

The Living Document

Major Life Events

Financial Changes

Relationship Changes

Geographical Changes

Tax Law Changes

Setting up Trusts

Periodic Reviews

Appointing or Changing Executors

1. Introduction: The Living Document

A Will is often viewed as a ‘living document’. Just as our lives undergo changes, so should our Wills. It’s good to review your Will to ensure that it remains relevant and reflects your current wishes. This includes reviewing your Will whenever you move, have more children, etc. Essentially, anytime your life circumstances change, your Will should change right along with it.

2. Major Life Events: The Obvious Catalysts

Whenever a significant event occurs in your life, it’s a clear signal to revisit your Will.

  • Marriage: Newlywed bliss also comes with legal implications. Update your Will to include your spouse or adjust asset distribution. What is your spouse getting in your Will?
  • Divorce: The end of a marital union often necessitates changes in asset beneficiaries and executors. How will your Last Will and Testament change?
  • Birth or Adoption: The addition of a child is a joyous occasion. Ensure they’re a part of your Will and consider setting up trusts. Is there a guardian you want to add?
  • Death of a Beneficiary or Executor: When a named person in your Will passes away, adjustments are crucial. How will your Last Will change?

3. Financial Changes: Wealth’s Ebb and Flow

Major financial shifts can greatly impact how you’d like your assets to be distributed.

  • Acquisition of Significant Assets: Whether it’s a new home or a valuable piece of art, newly acquired assets should be addressed in your Will.
  • Sale or Disposition of Assets: If you’ve mentioned specific assets in your Will which you no longer own, those sections need revising.
  • Starting a Business: This not only adds to your assets but might also involve complex distribution desires.

4. Changes in Relationships

Beyond marriages and divorces, other relationship dynamics can influence your Will.

  • Estrangements: Sometimes, we grow apart from those once close. Such shifts might impact your distribution wishes.
  • New Dependencies: Whether it’s a new stepchild or an aging parent, new dependents might need to be factored into your Will.

5. Geographical Moves: New Horizons, New Rules

Relocating, especially across state lines or countries, can necessitate a Will update due to differing estate laws. Your Will may need to be updated to the provincial/state laws of the province that you’re living in.

6. Changes in Tax Laws

Estate and inheritance tax laws are prone to shifts. An update in these laws might prompt a restructuring of your estate plan to maximize benefits. It’s wise to change your Will to adapt to the province/state of residence.

7. Setting Up Trusts

If you’ve recently established trusts or wish to integrate them into your estate planning, it’s time for an update. You can choose this option in your Last Will and Testament; choose to leave everything in a trust.

8. Periodic Reviews: A Proactive Approach

Even without significant life changes, it’s wise to review your Will every 3-5 years. Regular checks ensure that your Will remains aligned with your current wishes. Always good to be prepared.

9. Appointing or Changing Executors

Your chosen Executor plays a pivotal role in the execution of your Will. Any change in your trust level or their ability to perform the task should trigger an update. Who would you trust to be the Executor of your Estate?

Keeping your Will up-to-date ensures that upon your passing, your wishes are carried out as envisioned. You will want to avoid as many disputes between loved ones as possible. That is why it’s important to ensure that your Will is updated to match your life circumstances.

Life Insurance

Ah, life insurance. It’s not a fun topic; it conjures up images of complicated paperwork and it sounds..boring. But if you’re dealing with estate planning, the issue of life insurance is always going to pop up. So let’s break this down over a virtual coffee (or wine, I won’t judge). To keep it simple, you can click on each link to below to read about the basics of life insurance.

Why do you need Life Insurance?

Rule of Thumb


Consider Assets

Adjusting for Inflation

Toss the Intangibles

How much do you need in the way of Insurance?

Future Obligations

The Smith Family

Current Assets

Grand Tally

Why Bother with Life Insurance, Anyway?

Imagine, for a moment, you’re the main character in a movie. Picture this: If you were to unexpectedly exit stage left (y’know, kick the bucket), what would the storyline be for those you left behind? Drama? Romance? Financial horror? Life insurance is basically your way of ensuring your loved ones get a feel-good, everything’s-going-to-be-alright kind of movie instead of a nail-biting thriller. Life insurance provides a financial cushion for your loved ones if something should happen to you. Let’s break down life insurance for you, in the form of a romance-horror thriller.

Rule of Thumb: The Classic 10x Salary Guideline

You might have heard financial wizards say, “Just get a life insurance policy that’s 10 times your annual salary.” Easy-peasy, right? If you’re earning $50,000 annually, you’re looking at a neat $500,000 policy.

But let’s be honest, life (and death) isn’t a one-size-fits-all situation. So while this rule is a good starting point, there’s more to the story.

Digging Deeper: Future Obligations and Expenses

1. Debts: Think mortgages, car loans, student loans, credit card debt…you get the picture. Your life insurance policy should cover these so that your family isn’t saddled with your debts.

2. Funeral and Final Expenses: Funerals can be costly. And by costly, they could range anywhere from between $7,000 to $10,000 on average. That’s a lot of cheddar for a final farewell.

3. Children’s Education: Do you have kiddos? If you want them to get a degree without a side of student loan debt, factor in those future tuition fees.

4. Day-to-Day Living Expenses: Your salary might be gone, but daily expenses like groceries, utilities, and Netflix subscriptions (because, priorities) still roll in.

Considering Current Assets

“But wait,” you might be thinking, “I already have some savings and investments. Do they count?” Absolutely! If you’ve got a good chunk of change in savings, investments, or other life insurance policies, subtract these from your estimated needs. After all, you’re trying to fill a gap, not build a mountain of gold.

Adjusting for Inflation and Changing Circumstances

The future is as unpredictable as next year’s top hit single. Remember to add a buffer for inflation, especially if you’re looking at a 20- or 30-year term policy. And life is full of twists and turns: marriage, more kids, a bigger house. It’s worth revisiting your policy every few years to ensure it’s still a good fit.

Toss in the Intangibles

This is where it gets a bit emotional. Some folks want their life insurance to cover more than just the basics. Maybe you dream of leaving a chunk of money to your favorite charity or ensuring your spouse can retire without a worry. Or perhaps you want to leave a legacy fund for your kids and future grandkids. These aren’t definite expenses, but they’re worth considering.

So…How Much Life Insurance Do You Need?

We’ve covered a lot of ground, haven’t we? While that 10x salary rule is a solid starting point, everyone’s number will be a bit different based on individual circumstances. Think of your life insurance as a safety net tailored just for you and your family.

Here’s a quick formula to get you started on calculating how much life insurance you’ll need:

(Annual salary x 10) + (Future obligations and costs) – Current assets = Rough estimate of how much life insurance you need.

Then, once you’ve got a ballpark figure, chat with a financial advisor or insurance expert. They’re like the directors of our life insurance movie – there to make sure everything goes according to script.

Case Study: The Smith Family

Let’s meet the Smiths: Sarah and John, both 35 years old, with two kids: Liam, 7, and Emma, 4. John works in tech and has an annual salary of $80,000, while Sarah is a part-time freelance writer, pulling in about $20,000 annually. Together, they’re contemplating how much life insurance they need.

1. Using the 10x Rule

  • For John: $80,000 x 10 = $800,000
  • For Sarah: $20,000 x 10 = $200,000

2. Future Obligations and Costs

  • Debts: They have a remaining mortgage balance of $250,000 and car loans totaling $30,000.
  • Funeral and Final Expenses: Let’s take an average and say $8,500 each.
  • Children’s Education: They want both of their kids to attend college. Estimating $40,000/year for a 4-year degree for each child (remembering inflation and rising education costs), that’s $320,000.
  • Day-to-Day Living Expenses: Monthly bills and day-to-day expenses are about $4,000. Without John’s salary, Sarah will need help for a few years. Let’s buffer for 5 years: $4,000 x 12 months x 5 years = $240,000.

3. Current Assets

  • They have a joint savings account with $50,000 in it, and investments totaling $30,000.
  • John’s current employer-sponsored life insurance policy is $100,000.

4. The Grand Tally

  • For John:
  • Needed: $800,000 (salary) + $250,000 (mortgage) + $30,000 (car loans) + $8,500 (funeral expenses) + $320,000 (education) + $240,000 (living expenses) = $1,648,500 (the funeral expenses can be put on the backburner)
  • Minus assets: $50,000 (savings) + $30,000 (investments) + $100,000 (existing insurance) = -$180,000
  • Total Life Insurance Needed for John: $1,468,500 (Rounded to $1.5 million for simplicity)
  • For Sarah (considering she doesn’t make as much as John):
  • Needed: $200,000 (salary) + $8,500 (funeral, again, this could be put on the backburner) = $208,500
  • Minus assets (Assuming they’d use joint assets first if John was still around): $0
  • Total Life Insurance Needed for Sarah: $208,500 (Rounded to $210,000 for simplicity)

While John and Sarah’s life insurance needs, based on their individual incomes, although vastly different, are both are essential.

Remember, these numbers are based on a case study and can change. John and Sarah (just like you, dear reader) would need to revisit their life insurance policies in a few years. This is particularly true as debts decrease, their kids grow up, and their circumstances evolve. The Smiths’ story underscores the importance of regular financial check-ins. But for now, they can rest easier knowing they’ve taken concrete steps towards securing their family’s future.

The final take: life insurance is one of those adult decisions that seems complicated, but it doesn’t have to be. It’s all about ensuring your loved ones are cushioned from the financial what-ifs of life. So, grab another coffee (or that wine), crunch some numbers, and give yourself a pat on the back. You’re taking steps to protect your family’s future storyline, and that’s worth all the toasts in the world! 🥂📝💡

International flags. Executor outside Canada.

Who is going to be the Executor for your Will? While your mulling over that question, have you considered picking an Executor who lives near you? Or have you decided on an Executor who lives in another city or even another country? What would the difficulties be in having an Executor who doesn’t live near you? Many Canadians have asked as to whether or not they can appoint a foreign Executor for their will. This article breaks down the intricacies and considerations of such a decision.

Global Ties

Legal Standpoint

Bond Requirement



Staying Updated

Balance of Trust

1. Introduction: Global Ties in a Local Will

As families spread out and friendships form across borders, it’s natural to consider having individuals who live in other countries to be the Executor for your Will.

Canadian law does permit the appointment of a foreign Executor. However, it is essential to understand that provincial laws govern Wills and estates, meaning the exact regulations can vary from one province to another. It’s important to do your research and due diligence before making a final decision on this.

3. Bond Requirements: The Financial Implication

While appointing a foreign Executor is legal, most Canadian provinces require foreign Executors to post a bond. This bond acts as a form of security to ensure the proper administration of the estate. The bond’s cost can be significant, often equating to the estate’s total value.

4. Practical Challenges: From Time Zones to Travel

  • Geographical Barriers: Administering an estate from abroad can be logistically challenging.
  • Time Zone Differences: Communicating with Canadian entities may require flexibility.
  • Physical Presence: Some aspects of estate administration might require the executor to be present in Canada, leading to potential travel costs and delays. You may find it easier to appoint someone close to you, in the event of an emergency.

5. Legal Complexities and Tax Implications

Different countries have varying estate and tax laws. If your chosen Executor resides in a country with a vastly different legal system, it might create complications. This may be particularly true when it comes to tax obligations in Canada and the Executor’s home country.

6. Professional Guidance: The Role of Canadian Legal Counsel

Given the complexities involved, foreign Executors often benefit from engaging with a Canadian legal counsel. This not only ensures compliance with Canadian laws but also streamlines the estate administration process.

7. Staying Updated: Changing Laws and Regulations

The landscape of estate law, especially concerning international ties, is ever-evolving. Review your Last Will and stay informed about any provincial or federal changes are essential. This may help you in finalizing your decision over whether or not to choose a foreign Executor.

8. Conclusion: The Balance of Trust and Practicality

While appointing a foreign Executor for your Canadian Will is feasible, it’s a decision that must be weighed with the difficulties of travel, or legal implications that a foreign Executor can bring. Always do your research.