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Intergenerational Wealth Transfer: Protecting Family Wealth for the Future

Posted: September 08, 2017 By : Knowledge Bureau
Posted in: Strategic Thinking, Real Wealth Management, Tax Planning, Financial Literacy, Estate Planning, Financial Advisor, knowledge bureau, relationship management, succession planning, Evelyn Jacks, trusts, wealth transfer, inheritance, financial education, Millennials, Baby Boomers, high-net-worth clients, family wealth, intergenerational issues, intergenerational wealth transfer, asset management, investment plans, loan agreements, heirs, Generation Y, Real Wealth Manager Program, financial course

It’s a well-known fact that the next decade will see an enormous amount of money transferred from one generation to the next in Canada. According to a 2016 CIBC study, there is $750 billion at stake. Your clients, and your high-net-worth clients in particular, will be looking to you to help them preserve their family wealth, if they aren’t already.

This may sound as simple as doing some effective tax planning, using tools such as trusts and dealing with business succession plans, for example. But there are also thorny issues to deal with, such as your clients wanting to make sure that their hard-earned assets do not end up in the hands of their children’s stepchildren or ex-spouse in the event of a relationship breakdown down the road.

Conversations around transferring family wealth can be fraught with emotion and it’s your role to help your clients manage them in a constructive way. It’s tough enough for them to face their own mortality, and their fears and concerns are only exacerbated by worrying that their kids won’t be equipped to handle the sudden wealth coming their way or, worse, that they will feel entitled to their inheritance.

As their trusted advisor, you can help not only to allay your clients’ fears, but also to help them transfer family wealth successfully from one generation to the next.

  • Encourage these conversations and suggest acting as a facilitator in family meetings on the subject of estate and succession planning.
  • Create seminars and workshops for your high-net-worth clients and their families to help increase the financial literacy of the next generation.
  • Implement practical strategies to preserve family wealth, including tax planning, trusts, business succession and investment plans, loan agreements and prenuptial agreements to help keep inheritances in the family.
  • Look beyond the numbers to engage your clients and their children in discussions about the family’s goals and values. Talking about family wealth — where it came from, how it was built, what it means and what everyone would like it to accomplish — can establish common ground and avoid conflict, and helps to create a lasting vision for the family wealth.
  • Think about the entire family as your client, not just the parents you’ve been dealing with for years. Be proactive about developing meaningful relationships with the next generation as well, or you will lose them and their inheritance will be at greater risk.

Successful intergenerational wealth planning involves far more than making the right investments for your clients and helping them with their wills and estate planning. Taking a holistic approach to preserving the legacy of your high-net-worth clients means helping them to navigate the murky waters of family dynamics and to overcome their worst fears about what will happen to the wealth they’ve worked so hard to build. Engaging future generations in these conversations will make them better stewards of the family wealth and will give your clients and their families greater peace of mind.

Additional Educational Resources: Use of Trusts in Tax and Estate Planning, Elements of Real Wealth Management, The Real Wealth Manager (RWM™) Program

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