![]() “Planning is needed regardless of the size of wealth being transferred,” says Marshall. When it comes to preparedness, that misconception may be part of the problem. To the layperson, the term “wealth transfer” may bring to mind billionaires bequeathing enormous sums and setting up prodigious family trusts. “There was an assumption that the policy was to be owned personally by the client, but instead it was owned by the corporation, whose shares were to be inherited by just one sibling.” I’ve seen this before, especially with clients with complex wealth structures.” The message? Have someone look at the whole picture, and make sure the left hand knows what the right hand is doing. However, the shares of the corporation were to be inherited by just one of the children. ![]() Meanwhile, for good tax-planning reasons, the family accountant recommended placing the policy inside a family-owned corporation and naming the corporation as beneficiary. A new life insurance policy was purchased with the intent to have the death benefit go to one child. Marshall recalls a recent case in which a client updated their estate plan and will, meaning to split their assets between their two children. In some cases, the problem isn’t the absence of a good accountant or estate lawyer, but a lack of synergy between them. “I can count way too many times where families are destroyed following an inheritance-they’re no longer speaking to each other, they’re fighting over the estate, and what the bequeather intended for the inheritance simply does not occur,” says Riley. When it comes to proper estate planning, the stakes for families are enormous, and one would be hard-pressed to find a financial advisor without a few horror stories to tell. “Planning conversations are not happening early enough.” “There’s not enough open dialogue between families about how wealth will be passed down, and what’s to be done with it,” says Allison Marshall, RBC’s Vice-President, High Net Worth Planning Services and Financial Advisory Support. An Ipsos poll conducted on behalf of RBC Insurance found that 61 per cent of Canadians don’t feel knowledgeable about (or haven’t even heard of) the probate process, or the process to establish the validity of a will, and 57 per cent don’t know that certain insurance policies can mitigate estate tax burden. “There’s not enough open dialogue between families about how wealth will be passed down, and what’s to be done with it”īut available data and anecdotal reports suggest Canadians are largely not prepared to manage the money they inherit. People are looking more closely at their estate plans, and older adults increasingly express a desire to pass on their wealth before they die so they can see their families enjoy it.” “In recent years, this has really evolved. Families generally didn’t want to talk about this before, partly because people don’t love discussing their own demise,” says Alana Riley, head of Mortgage, Insurance, and Banking for IG Wealth Management. “Conversations about death and money are taboo for many Canadians. A recent Manulife Investment Management survey found that the pandemic spurred around one in five respondents to review their estate plans and/or update their wills, and of those who already have a will or estate plan, 28 per cent are increasingly discussing it with an advisor or their inheritors. “Not a day goes by without this wave of wealth transfer coming up.” And while the windfall was long coming, the pandemic seems to have nudged it higher on Canadians’ priority lists. ![]() “This is top of mind for financial advisors and our clients alike,” says Sabrina Fitzgerald, PwC’s National Leader for Private Clients & Family Businesses. And even for fortunate beneficiaries, being prepared to receive a windfall can mean the difference between a financial leg up and the chaos that can befall families without clear-cut estate plans. But the transfer’s broader impact may be a mixed bag-we’re passing the torch to a generation armed with exceptional social consciousness, but we risk exacerbating Canada’s widening wealth gap. It’s predicted to be the largest generational transfer of wealth in Canadian history-accelerated in part by the increasing popularity of “giving while living”-with potentially significant downstream effects on the country’s economic landscape. ![]() But will this broaden the wealth gap? (Illustration by Adam Cholewa)Ī seismic quantity of wealth to the tune of $1 trillion is set to move from Canadian baby boomers to their GenX and millennial heirs between now and 2026. Financial advisers across Canada are preparing for GenX and millennial heirs to receive a windfall from baby boomers.
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