Leaving a legacy
By Bruce Ball and Dona Eull-Schultz
As the baby-boom generation prepares to retire, the potential transfer of assets to subsequent generations is unparalleled.
While wealth transfer amounts could approach $1 trillion in Canada alone, succession planning is often overlooked.
Individual who has accumulated wealth should address two questions:
- Have I a succession plan for my wealth?
- What sort of legacy do I want to leave to future generations?
It is important to draw a distinction between basic estate planning and legacy planning.
The goals of estate planning are specific:
- Maximize and preserve the value of your assets;
- Minimize and defer tax and other costs that will arise on your death;
- Allow for an orderly transition of assets to your beneficiaries; and
- Providing for your dependants.
Legacy planning takes estate planning one step further by dealing with issues such as:
- Educating the next generation on issues surrounding wealth management;
- Improving communications within your family, ensuring that you share your intentions, hopes and concerns;
- Establishing family values; and
- Establishing philanthropic goals.
Before you develop a plan, you’ll need to gather some information and give thought to a number of key questions.
The goal is to reach some conclusions on important issues and draw a clear picture of your financial and non-financial goals, including:
- What am I most proud of accomplishing over the course of my life?
- What are the top three impressions I want my family and or my community to associate with me?
- Is my family prepared to assume full responsibility for the business and financial matters currently under my management?
- Does my family know all of my key trusted advisors?
- Which family members will share in my estate?
- Where a vacation property is owned, will it be kept in the family or sold?
- Do I have philanthropic interests?
The second part of the process is to take this information and develop a plan to meet your goals. As the plan is developed, key components may include:
- A will, which is reviewed and updated regularly;
- Setting a process for open communication;
- Outlining how your wealth will be divided and why;
- Assessing whether your family is capable of managing your financial affairs;
- Reviewing your tax issues and considering any tax planning alternatives;
- Addressing your insurance and retirement needs;
- Determining the use of a retained vacation property; and
- If you have philanthropic interests, setting a plan to identify the charities you want to benefit.
While the experience may seem overwhelming, remember that planning for your legacy is a process and these issues are best dealt with over time with the help of your investment and tax advisors.
Bruce Ball is a National Tax Partner at BDO Canada Ltd. and Dona Eull-Schultz is Chief Operating Officer and Portfolio Manager at Leon Frazer & Associates. This article was originally published as a BDO client communication. BDO has 95 offices across Canada, with 1,600 professionals and more than 300 partners.