The most priceless financial gift to your children? – Being organized.
“We all know that there are only two certainties in life: death and taxes. The good news is that with guidance, both certainties can be minimized if not eliminated”
says David Somerville.
I came across a Gallop poll this week asking the question…” Do you feel the passing of your estate is well planned,” 88% of respondents said yes to the survey but on further review, only 8% of respondents have accurately prepared. That startling figure is less than 1 in 10 families that have properly prepared for the transfer of the family wealth when that final day comes.
Another startling fact is that 55% of adult Canadians don’t even have a basic will. We do know that over the next 10 years there will be over 750 billion dollars of assets changing hands via inter-generational wealth transfers. With this in mind, shame on the lawyers out there and shame on the financial advisors as well for not helping clients see the need and value of this eventual reality. We all know that there are only two certainties in life: death and taxes. The good news is that with guidance, both certainties can be minimized if not eliminated.
The majority of families aren’t prepared so I’m going to suggest a few ideas to help in this area. There are four major reasons most families need to plan for this phase of estate planning.
When planning for estate organization the long-term cost is dramatically lower and your heirs will retain more of your hard earned money and assets. The unprepared estate is at the mercy of the law firms who the heirs retain to help settle. Prices could range from $250 per hour and up. If an estate is unprepared and has complexity, the final bill could in the tens of thousands. Being prepared can dramatically reduce this cost.
Every family is extremely busy these days and with the backlog and delay with lawyers and the vast number of estates to settle, families are looking at up to 2 years to finalize the closure of Mom and Dad’s estate. I believe that a defined process can reduce the time delay dramatically. One lawyer we use frequently said to us that “if a family is not prepared and organized, we simply don’t have time to help them.” How would that be, trying to settle an estate and not being able to find a lawyer who has time to help?
An unprepared estate would leave your executor and heirs in a state of total confusion. Where is this and where is that? Who really wants to go through each of Mom and Dad’s drawers looking for bank statement and clues as to where things are located?
This is the final reason for having a structured estate plan. The last thing a parent wants is the children and heirs fighting and arguing over the distribution of assets. Every heir has their own agenda with the settlement and usually when the estate plan is non-existent then almost with certainty will you find a family conflict.
With all of the challenges dealing with the passing of a loved one and all the responsibility that comes along with being an executor, I highly advise that you have an advisor with a speciality in this type of planning. Our firm has built an efficient platform in helping families prepare for and execute this critical stage in the transfer of a loved one’s wealth and belongings.