Tag Archives: inheritances

How to mitigate the burden of Sudden Wealth

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Image Source: Pixabay

By Beau Peters

Special to the Findependence Hub

You’ve always dreamt about it and now it’s happened. Your ship has come in. You’ve found the pot of gold at the end of the rainbow. Your future is secure. You have found sudden wealth and now the world lies at your feet, just as you’ve always wanted.

And yet, perhaps life isn’t quite what you expected. Perhaps the affluence you’ve found has brought with it as many unanticipated burdens as it has alleviated. Indeed, no matter how you came into your good fortune, the simple truth is that sudden wealth has its own challenges, ones that you must be prepared to address effectively if you want to secure your own future well-being.

The Psychological Toll

Before you came into your money, you probably imagined that if you were only rich, your life would be perfect. To be sure, wealth can solve a lot of problems. You no longer have to worry about how you’re going to keep a roof over your head or food on the table. You don’t have to worry about the car note or your student loans. You’re secure, as is your family.

However, when you’re absolved of financial worries, especially when this relief comes quickly, that can all too often shine a bright spotlight on other issues in your life. The obligation to make a living and pay off your debts might well have served as a distraction, enabling you to avoid confronting challenges in your relationships, your career, or even your own mental health.

With this obligation removed, so too is the distraction it once provided. You may well find yourself overspending in the effort to continue the avoidance. You may panic buy to comfort yourself or to relieve boredom. 

You may lavish your friends and loved ones with expensive gifts in an unconscious attempt to buy their affection or to compensate for guilt you may feel over your sudden prosperity. In fact, emotional spending is one of the most significant, and most pernicious, ways people waste money because the pattern is such a difficult one to break.

Whatever the reason, overspending can be one of the first and most important symptoms of psychological distress in your new life. Confronting the source of the issue, the depression, fear, guilt, or trauma that often lies at the root, is essential to overcoming it.  

Managing the wealth

When you’ve had a windfall, it can be tempting to think that the hard work is done. It’s often just the beginning. Far more often than not, the greatest challenge lies not in acquiring wealth but in keeping it.  Continue Reading…

In wealth transfer, communication is as important as inheritance

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By Jim Greenwood, CFP

Special to the Financial Independence Hub

What’s the most difficult thing to talk about with your children? For many of us, discussing plans for our estate is pretty high on the list. Talking about your will and your own passing can be uncomfortable. According to a recent IPC Private Wealth survey of Canadians with at least $500,000 in investable assets, 58 per cent have not talked to their heirs about instructions for their estate, both financial and personal.

Having the inheritance discussion is very important, largely because of the consequences after your passing if you don’t have the talk. Perhaps one child wants to keep the vacation property while the other wants to sell, creating financial discord among siblings. Or there is a dispute about one’s final wishes upon death. The consequences are many and varied, and can be different for each family but equally devastating.

Holding the family meeting

As a financial planner myself, I can tell you that I am very happy to host or attend a family meeting, which should include the executor. It takes the pressure off you. Just let your children know that your advisor recommends having beneficiaries present during part of your estate planning process.

Or say you want to hold a meeting on your own. Beforehand, ask your advisor for coaching on approach and content. You’ll feel a lot more comfortable during the family meeting.

At my firm, we believe there are two main themes to a wealth transfer meeting. The first is about values. Share your views of money and wealth, ask your children what money means to them, and have a discussion. Tell your children what it took to create your wealth. Talk about the idea of a legacy – helping out your children and grandchildren with the hope that your children will do the same. Why discuss these ideas? You want to guide your children to a place where they feel appreciative, not entitled. Where they are trustworthy, not irresponsible.

The second theme is all about your will. Talk about how you’d like your legacy to be managed, and go through the distribution of assets, explaining the reasons for your decisions. This is where you discover if any of your bequests could unintentionally lead to conflicts between children, delays in estate administration, or your will being contested. If any problems arise, you’ll have the opportunity to resolve them — and you’ll be thankful you uncovered the issues now.

Wealth transfer for blended families

If you’re in a blended family, you have an additional layer of estate planning. Take the case of an individual in a second marriage who has children from the first marriage, and needs to provide for both the spouse and children. Continue Reading…

Business owners need to step up Wealth transfer plans for next generation

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Here’s my latest High Net Worth blog for the Financial Post, titled Only 40% of new business owners have transition in place, says new report.

The latest in a series of global surveys by RBC Wealth Management and Scorpio Partnership finds that while more than a third of business owners in the United States, Canada and the United Kingdom  have a full formal plan in place to pass their wealth on to their heirs, one in five have not even started to plan.

RBC surveyed 384 high-net-worth and ultra-high-net-worth individuals in the three countries, with average investible wealth of US$6.4 million. While 51% of business owners have a will in place, a startling 22% have not yet started any sort of wealth transfer preparations; which means “the majority of business owners are relatively unprepared to pass on their financial legacy,” the report says.

One of the experts I consulted was business transition and valuation expert Ian R. Campbell, who  recently wrote a Hub blog about Donald Trump’s business transition plans for his high-profile family members. It was also the basis for an earlier Financial Post column by me headlined Donald Trump is upping the ante in the Wealth Transfer game.

Continue Reading…