Transitioning Family Wealth

Having conversations with your parents or children about topics like death and inheritance can be uncomfortable. However, initiating these conversations from a values-based and aspirational tone often helps ease into the heavier topics. Whatever approach you decide to take, the first step is always the most important.

Our needs change over time, and the financial well-being of loved ones can be impacted across generations. Whether for yourself or your parents, it’s important to keep your family informed and ensure you have the right risk protection plan in place.

The way you shape your legacy will largely depend on the structure of your family. Every family has different dynamics and a well-structured estate plan is unique to each family situation.

Speak to a tax expert to ensure that your estate will be structured in a way that results in the highest after-tax result. For example, many people worry about “probate fees” (also called “estate administration taxes” in Ontario). However, in most cases, it’s income taxes that can take the biggest bite of your estate (particularly in Manitoba and Quebec, where there are no probate fees).

Depending on your family structure, when dividing up an estate, some assets may be more appealing to one recipient than another. Ensure everyone is clear on the decisions and reasons, including tax implications and responsibilities.

Value isn’t always defined by dollars. Often there are items that hold great sentimental value, such as family heirlooms, jewelry, artwork or furniture.

• Are there certain gifts you feel strongly about passing on to a specific person?
• Have you shared your intentions with your family, to understand their feelings and requests?   

If a beneficiary is still relatively young or is someone requiring oversight in managing a large amount of money, consider how best to structure the inheritance so it is used appropriately.

How will charitable giving benefit your overall estate? A carefully constructed giving plan helps create a legacy that expresses your values and the causes you care about, while also reducing your income tax liability

Choosing a personal representative (sometimes referred to as an “executor/executrix,” “liquidator” or “estate trustee” depending on where you live) is a critical decision during the estate planning process. The personal representative will be responsible for many tasks, including locating the will, contacting the beneficiaries, and ensuring that the family’s wishes are carried out as outlined. Ensure your personal representative knows where you keep your estate documents so they can easily be located when necessary.

These conversations will include many financial terms that some family members, especially children, may not understand. If you also need additional guidance on a topic, Dan Hague & Associates has access to a variety of educational resources and subject-matter experts.