Five years ago, when Stephen Tait lost
his mother, Muriel, to cancer, the family was left reeling from a loss
they weren’t prepared for. Stephen, his sister, Jackie, and their
father, Neil, expected that their mother and wife would be able to beat
the disease she had spent the previous four years fighting.
“When
my mother passed, she had the required will, but she wasn’t ready to go
mentally. She had plans that she was going to fight this cancer, like
we all did,” said Stephen Tait, a 53-year-old financial services
executive in Toronto. “When she did pass, it was a bit of an eye-opener
because there were a lot of things that we weren’t necessarily prepared
for.”
Now, with his father
approaching his 81st birthday, Stephen wasn’t surprised when he and his
sister were asked to join his father’s financial adviser to have a
family meeting about his father’s financial expectations in case
anything were to happen.
“I
wanted them to have a thorough understanding of my affairs and to know
exactly what my assets were and how they are distributed so there will
be no surprises when the time comes,” Neil Tait, a retired bank
executive, said. “It wasn’t just a review, but it was an open discussion
where if they had any observations or a suggestion that they liked to
do things differently or change, then this was an opportunity for them
to bring it up.”
Such family
meetings are becoming a bigger part of the financial-planning process as
Canadians are now living longer and many retirement plans are being
extended to the age of 100, says Susan Latremoille, director of wealth
management with the Latremoille Begg Group at Richardson GMP in Toronto.
“Those
of us who have embraced this holistic perspective can see the linkages
and help people with those turning points in their lives," says Ms.
Latremoille, who conducted the Tait family meeting. “We provide way more
services than we used to. It is no longer just an investment role.
Today, there is nothing that is off the table. As people age, cognitive
health becomes a bigger issue, educating children about money and
leaving an estate, sickness and disease and the implications that come
with that. “
And the importance of
that role is growing. Canada’s wealth-management industry is in the
midst of the biggest intergenerational wealth transfer to date.
Approximately $1-trillion will pass from one generation to the next in
Canada between 2016 and 2026, according to data from Strategic Insight.
Not addressing plans can lead to misunderstandings, unpleasant
surprises, possible legal complications and, in turn, family conflict.
Among
Canadians with at least $500,000 in investable assets, 58 per cent have
not discussed instructions for their estate with their heirs, according
to a recent poll conducted by Investment Planning Counsel Inc.
Of
those, 46 per cent said they intended to have a discussion at some
point in the future, but 12 per cent said they had no intention of ever
discussing inheritance plans with their beneficiaries.
“A
lot of people don’t want to talk about it because they are afraid to
upset family members, but the lack of communication could be leaving
inheritors in the dark," says Sam Febbraro, executive vice-president at
Investment Planning Council Inc. (IPC). Mr. Febbraro suggests financial
advisers be introduced to family members as a first step. “Parents
should explain their objectives and make sure there is clarity in the
decisions they have made.”
In
addition to investment portfolios, supplementary information that
should be shared in a family meeting includes physical items, vacation
homes and cottages, charitable donations and medical information, he
says. Many people also don’t anticipate the size of the digital
footprint they will be leaving behind, Mr. Febbraro adds. They need to
provide details and passwords for financial, e-mail and social-media
accounts and for any professional contacts such as lawyers and
accountants.
Family meetings aren’t
top of mind until there is a catalyst, says Darren Coleman, a portfolio
manager with Raymond James Ltd., who has increased the number of family
meetings with his clients.
“They can
be tricky to set up because most people want to maintain their privacy,
especially around close family,” Mr. Coleman says. “Money for many
families is a taboo topic. It’s not something they are used to talking
about, and want to keep very private."
“There
are many clients who then realize how complicated it can be and they
say they didn’t realize what went into it," Mr. Coleman says. “They
don’t know how difficult it is for the survivors to cope with things."
For
Neil Tait, he didn’t want to leave anything open for interpretation and
plans to conduct a family meeting once every five years and will
eventually incorporate his grandchildren into the discussion. Neil, who
now spends his winters in Florida, has worked with Ms. Latremoille for
more than 25 years and is confident that when the times comes, his
affairs will run smoothly.
“My
children had a pretty good idea of what my total investments were, but I
had never broken it all down for them, “ he says. “This is something
Susan laid out for them. While the total number wasn’t a surprise, the
breakdown allowed them to see what is in the U.S, in Canada and what is
held internationally – why we have it there and what the return is in
each segment.”
As
well, Neil spent a lot of time travelling abroad to Asia during his
career and has continued to donate to the Chinese community in Toronto.
Both his children know that’s something he holds dear to his heart, as
well as the hospital that took such great care of their mother during
her illness – Toronto’s Princess Margaret Hospital.
“I
appreciated the opportunity – for both my sister and I – to actually be
able to listen to my father’s plans for himself and speak with the
person who will be executing on those plans,” Stephen Tait said. “The
ability to talk about his final wishes and for him to know we will be
able to follow through with them."
More
Canadians need to start engaging family members in their
wealth-transfer conversation, IPC’s Sam Febbraro says. He suggests the
following steps to help ensure a smooth transition and prevent family
conflicts.
* Introduce your
family to your financial adviser: Set up a meeting with your children
and your financial adviser – even if your adult children have their own
adviser, it will be beneficial for them to have made the connection;
*
Make decisions in a low-stress environment: Hold a family meeting when
you are healthy and not under pressure to make decisions quickly;
*
Explain your objectives: Share the reasons for the decisions you are
making, your objectives and how they align with your values;
* Create
an estate directory: This directory will detail essential items such as
bank accounts, investments, insurance policies, wills and power of
attorney and how to access them when needed;
*
Include your executors: Introduce your executor to your financial
adviser. Inform and educate your executor on your intent and wishes,
where to find the will and if they need to contact any third parties;
* Educate your heirs: Educate and prepare your heirs to take over and manage your wealth.
Marta Iwanek/The Globe and Mail
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