Helping families ensure smooth wealth transfers

Four adult family members dressed in formal attire sit closely together in a living room, to discuss matters of inheritance

The great wealth transfer is currently underway: millennials/genz are finding some financial relief with some money trickling down their way from their boomer parents (this brings up an entirely different topic on the problem of generational wealth). For now, some millennials/genz have some money coming their way; this can go a long way to keeping some money in their pockets, given the absolute shamble of an astronomical cost of housing/rental market, sky-rocketing student loan debt, and a weak job market. Some millennials and genz are even getting “living inheritances” from their parents. The stigma that usually surrounds topics of dicussion around money and inheritance are slowly fading away – it’s no secret that income inequality is growing, and people are more open to talking about money, debt and loans. Having solid discussions surrounding inheritance and money can, at the very least, soothe any hurt feelings. You wouldn’t, for example, want one sibling questioning as to why he/she is getting less inheritance than another, so that’s why talking about it openly (no matter how uncomfortable) can really help out your family members.

A whopping $1-trillion is set to be passed down to millennials/genz in Canada by 2026. This unprecedented shift, happening one family at a time, creates the need for tailored financial advice. Obviously, parents are going to be wary about having their money being blown. This is why talking about money and the need to spend, save and invest it wisely is so crucial.

Wealth transfers are full of opportunities – and challenges. Keep these following strategies in mind to ensure a smooth process:

1. Start Open, Transparent Conversations Early:

One of the most vital, yet often overlooked, aspects of wealth transfer is open communication. When wealth transfer is shrouded in secrecy, it can lead to feelings of resentment and rumours among family members. It can cause fights and breakups. You may want to start by initiating the important (yet, somewhat uncomfortable) conversations surrounding money, your legacy, your estate plan, etc. Open and honest expectations for everyone involved means you’re off to a GREAT start.

Here are some steps to initiate those conversations, if you’re feeling uncomfortable:

Regularly scheduled meetings with key members of your family (children, spouses, trustees)
Discuss what you want to do with your money, your assets, your estate, and why
You may want to involve a trusted financial advisor or estate planner to help ease into these (difficult) conversations

2. Drafting a Comprehensive Estate Plan:

A comprehensive estate plan includes a Will, trusts, a Power of Attorney, a Living Will, and other principal documents. It also involves a comprehensive strategy about minimizing estate taxes, and other important decisions regarding your assets.

Boomer looking over payments — *A parents looks over his Living Will*

Here are some steps to initiate the process:

Create a Will: An important legal document, outlining where your assets will go when you pass on.
Consider a Power of Attorney: An individual handles financial matters in the event of incapacitation.
Living Will: Someone else makes healthcare decisions on your behalf.

3. Minimize your taxes:

Estate taxes can significantly reduce the wealth transferred to your heirs. Therefore, reducing taxes when it comes to planning your estate is integral.

Father doing his taxes — *A father furrows his brow as he goes over his taxes*

Here are some steps to minimize taxes on your estate:

Gift Tax Exclusions: You may want to gift a certain amount without paying taxes to various people
Charitable Donations: Leaving items to charities in your Will, can help reduce taxes (which are deductible)

4. Succession Planning for Family Businesses:

Obviously, succession plans are necessary for family buisnesses to run. Without a succession plan in place, there is the possibilty of a family business being poorly-managed or fall apart without your prescence.

Parents over looking their succession plans — *A couple looking over who will take over their business*

Here are some steps to initiate the process of succession planning for a family business:

Identify the best individuals to run your family buisness (a child, star employee, etc.)
Training and mentorship are provided to said potential heir to the buisness. Mentorship is key
A succession plan with documented roles, responsibilities, etc., – are all provided – a training manual, if you will

5. Financial Literacy:

Obviously, coming into a sudden inheritance can be both a windfall and a hazard – a windfall to help you out if you’re struggling financially, but it can be a potential hazard if you just end up blowing your inheritance. Whether it’s a “living inheritance” or an inheritance your children receive upon your death, follow the steps below to help guide your family:

Estate Planning in Canada — *No matter how young or old, it’s best to always review your estate plan*

Here are some steps to initiate the process:

Encourage your children to attend financial planning sessions – they’re not only for the rich
Plan strategies through your trusted family’s financial advisor; someone who your children (or heirs) can depend upon. Later, they can switch to a different advisor, if necessary
Instill certain values: fiscal responsibility, philanthropy, prudent investments, wealth preservation

6. Review and Update Your Plan Regularly:

Life changes, and so should your estate plan: review it on an annual basis (don’t try to leave it on the backburner – we have had many clients who often leave creating their Will, Power of Attorney and Living Will to the day right before a vacation). Make sure everything is properly written out – don’t rush it!

family overseeing their estate-planning documents — *Parents carefully reviewing and updating their Will, Power of Attorney and Living Will*

Here are some steps to initiate the process:

Review your estate plan on an annual basis – perhaps once a year
Discuss modifications with your financial advisor, to keep abreast of changes in the law
Coordinate and discuss changes to your plan with your family members, so there are no surprises

An intergenerational philanthropic strategy:

This isn’t really part of your estate-plan, but you may want to look at the importance of philanthropic giving.

Philanthropic giving towards charities or causes you really respect or admire is always a good strategy of estate planning. It’s about giving back, and shows your loved ones the importance of being charitable.

man holding dollar bills — *What would you do with your inheritance?*

You can have a open and honest discussion with your family members about which causes they would like to support and why. How much of your estate would go to those causes? This can bring everyone together in the estate planning process as well.

You may want to read more about easing into smooth wealth transfers, here.

https://www.theglobeandmail.com/investing/adv/article-these-four-strategies-can-help-families-ensure-a-smooth-wealth/

O.J. Simpson and the “Trial of the Century”

O.J. Simpson dramatically sitting in court room

The “Trial of the Century” ignited a media firestorm in 1994.

People are still enamored by the The “Trial of the Century” that took place over two decades ago, in 1994. The trial, centering around the (now infamous) football player, O.J. Simpson, brought him into the limelight, albeit away from the roaring crowds and cheering fans. His trial over the murders of his ex-wife, Nicole Brown Simpson, and her friend, Ron Goldman, a then 25-year-old waiter, would take eight months.

The trial captivated everyone’s attention.

No matter what the verdict, the trial sullied O.J.’s reputation and lifestyle: many were already convinced of his guilt even before the trial wrapped up. His subsequent arrests in the late 2010’s didn’t help.

The 1994 trial would be considered “viral” if it was taking place today: it captivated everyone’s attention, the media was obsessed with it, the trial was splashed across every news outlet, and everyone was fascinated by how the trial would play out.

O.J. Simpson was eventually acquitted of the murder charge. That, is an entirely other story on it’s own.

Undeterred by the “not guilty” verdict in the criminal court case, the Goldman family pressed for a civil case against the former footballer. In 1997, just a few years after his “not guilty” verdict from the criminal trial, a civil court handed down a guilty verdict. O.J. was ordered to pay the Goldman family $33.5 million in damages for the death of Ron Goldman.

The family hasn’t seen a penny of that money. The reason they haven’t been paid for decades? Perhaps it’s because that any payment to the Goldman family would be an admission of guilt, but, strangely enough, the NFL player who once lived an lavish lifestyle claimed that he couldn’t afford to pay the Goldmans.

Simpson died in April of 2024 of cancer, and the Goldman family has continued to fight his estate for the amount the civil court awarded them decades ago (although now with $100 million tacked on for interest!) O.J. Simpson’s death has reignited the media’s interest in the late football star’s estate.

Malcolm LaVergne, O.J.’s longtime lawyer and estate executor, boldly declared that the Goldman’s weren’t going to get “a penny of the (late) football star’s estate.” LaVergne had seemingly been publicly sparring with the Goldman family, shortly claiming after O.J’s death, that: “his hope was that the Goldmans get zero, nothing.”

The lawyer soon backtracked on his (rather harsh) words, claiming, “that the Goldman’s claim will be accepted.” LaVergne insisted that his initial damming words were not meant for the family, but rather for the attorneys representing the family. In other words, according to him, LaVergne wasn’t really battling it out with the Goldmans, he was duking it out with their attorneys.

Either way, it may not have been a good look, because LaVergne soon backtracked.

LaVergne agreed to the Goldman’s request for payment “in accordance with Nevada law.”

As for the rest of O.J.’s estate, it appears that it was put into Trust.

It looks like the “Trial of the Century” will come to an end, with the Goldman family finally finding peace.

Family Feud

Inheritance can be tricky; many of us dream about receiving a large inheritance from a long-lost dead relative (with no strings attached, of course). Inheritance becomes a contentious issue within families, conflicts arise, relationships become strained (or completely severed). When a family member passes away, the way in which their assets are distributed can lead to feelings of envy, anger, or disheartenment. Feelings of perceived favoritism may arise, anger over the “unfairness” of splitting assets, etc. Disputes are exacerbated by underlying family dynamics and unresolved tensions; all of this adds further fuel to the fire that is the grief and turmoil the family is already going through, having lost a loved one. Communication is key!

In reality, getting an inheritance in real life does come with strings attached: wars over inheritance can tear families apart. Celebrities like Michael Jackson, Prince, and many others, have left behind bawling, brawling, family members fighting countless battles in the courtroom.

But does the average joe, who doesn’t have as much money as say, Michael Jackson, really have to worry about what he or she is going to pass on to their kids?

As it turns out: yes.

Inheritance isn’t just about the money you’ll pass on to your family members. Receiving an inheritance is loaded with emotional significance: sentimental items, heirlooms, family paraphernalia – all have a connection to the past. This connection could either make or break the members of your family members when you pass away. This is more than just about money; inheritance can become a symbol of how loved a child feels.

Emotions can run high; especially when one sibling fears receiving nothing left behind by his/her parents, or when when one sibling learns that he or she is about to inherit less than a brother or sister.

Communication is the key to dealing with this problem: when tensions are running high among family members, having a calm discussion with your children before setting out your Will can really soothe over any hurt feelings. Your children should be able to understand the reasons as to why they are getting what they’re getting when you pass away. The reasons concerning their inheritance should be clearly outlined. Essentially, if you, as the father, or the mother, are writing up your Last Will, you’ll want to sit everyone down and have an open and honest conversation as to why your children are inheriting what they are, and the reasons behind it. Why is one sibling getting more? Why is one sibling getting less? Communicating with your loved ones about the reasons behind their inheritance before you pass away, before you get sick, and while you’re clear of mind, keeps the lines of communication open.

For some, communication with their parents is not so easy, particularly when one parent appears to be narcissistic. There are parents who will make decisions regarding their children’s inheritance and have the attitude of “It’s my money, and I can do whatever I want.” The lack of a need to justify their decisions as to why they’re doing what they’re doing can cause a rift among their children. That appears to be the case with one person who recently wrote to an online column (Dear Amy) asking for advice about how to deal with her estranged brother:

“Dear Amy: My brother and I are both in our 70s. We’ve only spoken once in the last three years. After our father passed, our mother sold their home. My father had previously told my brother that when they sold the house, he wanted to give a certain amount of money to each of us. Our mother did not honor our father’s wishes, but did give us each a smaller amount. Years later she deposited a good sum of money into his account but asked him not to tell me. (I wouldn’t have cared at all.) Mom later called the bank and asked for the money back. My brother was angry, but approved it, and then stopped speaking to her. My mother moved closer to me and I was her sole caretaker for seven years until she moved into assisted living. She spent the rest of her money paying for her care. My brother thinks I got more money from her than he did, which is not true.”

With the mother now gone, greed, as the author implies, is the problem:

“He [my brother] also expected me to give him money from the sale of my home because I had gotten more than the asking price. I had sent him $1,000. I also sent him over $5,000 when he needed emergency dental care. I wondered why he never returned my calls, until I found out from his estranged wife that he had expected to receive a lot more money from me from the sale of my house.”

There are certain details that appear to be omitted, but that is the gist of the letter. The author wonders what she can do to smooth things over with her brother.

The ball, as Amy replied, is now in the brother’s court.

You can read more about this story, here.

Although the author doesn’t mention it, things could have been smoothed out if their late mother had simply sat down with her two children and explained the reasons as to why she was spending their inheritance the way she was. A (difficult) conversation about the whole thing could have saved years of estrangement between the two siblings after she passed away.

It may have even kept the relationship between the two siblings intact.

Take this as a lesson when you’re planning our the inheritance for your children or loved ones: communicate!

You’ve got $50 million dollars

You’ve got $50 million dollars – as the title implies. What do you do with it? Before you go blowing it all on a fancy cruise vacation, new house, BMW, new car, or yes, avocado toast, take some time to collect your thoughts and let the fact that you’ve inherited a fortune sink in. That’s what Ken from Sacramento did. After inheriting $50 million dollars from his parents, he called into the Dave Ramsey show to gain some perspective on how to manage his money. You can learn from Ken on what to do if you ever wind up in the same situation. Here are a few tips on managing inheritance that we’d like to share:

Stay calm and don’t be in a rush to spend your money

See professional advice

Set clear financial goals

Pay off debts and pad your emergency fund

Invest your money wisely

Don’t blow it all

Giving back

1. Take a Breath and Don’t Rush

This one should be obvious: don’t rush to blow it all. When Ken reached out to the Dave Ramsey show about how to spend his $50 million dollar inheritance, Ramsey offered the following advice: spend some, save some, invest some, give some of the money to charity, etc. The news of an unexpected inheritance can be overwhelming, triggering a flurry of emotions. Try to adjust to your new financial reality before making any rash decisions.

2. Seek Professional Advice

One of the first things you may want to do is to seek out professional advice from a financial advisor. While Ken Consider consulting with a financial advisor, accountant, or lawyer who specializes in inheritance matters. That is why the caller called into the Dave Ramsey show: to receive advice from a professional on what to do with his inheritance. A financial advisor can help you grasp the full picture of dealing with taxes, investments, any fees, bills to pay off, debts, etc. An advisor can offer the best strategies for managing or investing your assets. A financial advisor may also help you tackle paying for everything in this era of high inflation. You may want to consult with an advisor you are really comfortable with, and who you have a good relationship with. You don’t want to stick with the SAME advisor just because that particular person is someone who your parents used (IF your parents had one).

3. Set Clear Goals

Once you’ve gathered the necessary information, it’s time to set clear goals for what you want to achieve with your inheritance. You may want to look at paying everything off you owe before deciding to (wisely) use the money to invest, renovate your house, travel, etc. Specific goals are the key: whether it be diversifying your portfolio, or planning your estate.

4. Pay Off Debts and Build Emergency Fund

This one goes without saying: If you have any outstanding debts (student loans, credit card debt, etc.), consider using a portion of your inheritance to pay them off. Even if you comb through your finances with a financial advisor, you still shouldn’t touch that money and just brazenly spend it all. When you pay off your all of your debts, you can relax and focus on investing for the future. It’s a practical way to secure your financial future and relieve the burden of debt. It’s also good to prioritize an building up an emergency fund to cover unexpected expenses. You don’t have to have a specific amount between three to six months of savings, but if you have an inheritance and are looking to save for the future, it’s always wise to do following: pay off debt and have an emergency fund. It sounds obvious, but when you actually have access to the money, it’s tempting to simply blow it all. You might also underestimate how much money you really need to live on and invest for your future.

5. Invest Wisely

Consider diversifying your inheritance into investments to mitigate risks and maximize returns. Consult with a financial advisor to develop an investment strategy. Whether you invest in stocks, bonds, real estate, or put money into mutual funds, TFSAs, or RRSPs, make informed decisions.

6. Plan for the Future

Once you have used that money to plan for YOUR future and invest wisely, you may also want to spread the wealth (to your family members and loved ones, that is). You may want to use some of that inheritance to fund your children’s education. You may not have a million to your name, but estate planning is always valuable. Take the time to create or update your estate plan, including Wills, trusts, and beneficiaries. Planning ahead ensures that your assets are distributed.

7. Enjoy Responsibly

It sounds like a beer slogan, but it’s true: enjoy your money responsibly. Treat yourself to something special, but avoid overspending or making impulsive decisions that could deplete your inheritance. Stories abound about lottery winners who blow through their money within a decade and wind up broke. If you’re not careful, the same could happen to you, regardless of how you come across your windfall (i.e. lottery or inheritance).

8. Give Back

Lastly, many people who have their Wills drawn up often consider leaving something for charity. Many people do this in their Wills, but if you ever come across a significant windfall, you may want to consider donating the money right away. That money you donate will surely have a meaningful impact on others around you.

Whether you inherit a million, or a small windfall, just be sure to manage it carefully.

Be sure to seek out advice, like Ken from Sacramento.

1. Start Open, Transparent Conversations Early:

2. Drafting a Comprehensive Estate Plan:

3. Minimize your taxes:

4. Succession Planning for Family Businesses:

5. Financial Literacy:

6. Review and Update Your Plan Regularly:

An intergenerational philanthropic strategy:

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