Baby Boomers were in the right place at the right time. Following the Second World War, this generation experienced immense economic growth and prosperity. The state of affairs afforded them the golden opportunity to accumulate much wealth in their lifetime. Boomers—born between 1946 and 1964—are currently the wealthiest generation on the planet. Their mean net worth falls between $970,000 to $1.2 million, according to Fortune.

The fact is, they are getting older and what it represents is the largest intergenerational transfer of wealth in history. In order to transfer the greatest amount with the least hassle, preparation is the key. Whether you are reading this from the perspective of children looking at the parents or parents looking at the children, it all still applies.

Designate Powers of Attorney (POA)

Where there is incapacity or death, a Power Of Attorney allows others to make important decisions so as not to freeze all assets. There are two types of POA: POA of Property has to do with financial decisions, and POA of Care which has to do with the management of health and living arrangements. Both are important but it doesn’t necessarily have to be the same person. There is a standard Government of Ontario template you can use to designate a POA, and you don’t need to hire a lawyer to do it. If you would like this template, let us know and we can email it to you.

Update the Will

According to CTV news, 49 per cent of Canadians between the ages of 45 and 54 don’t have a will. For those that do, they likely haven’t looked at it in years. In our view, there are three levels of wills and therefore three levels of expertise required. Level one is complicated. For example, a business owner who has four corporations with 10 businesses and two business partners would benefit from a very experienced lawyer with expertise in this area. If you need one, let us know and we can provide a referral. Level two is for most people who have modest needs but some complications. This can be done by a straightforward estate lawyer at a reasonable price. Canadian Lawyer Magazine did a survey in 2021 and found the average price at that time was $624. Again, we would be happy to provide a referral. The third level is the most basic. For simple needs, you can use online resources like www.willful.co and get a will starting at $99.

If you don’t have a will, we highly encourage you get one. Most people put off the exercise because they are unsure about the small details (who gets Mom’s ring or that nice piece of art). They get stuck on the details and ignore the bigger picture. The best advice is to get something in place—anything—to cover the big pieces and worry about the minutiae later or through codicil. Even if you start with willful.ca now and then fill in more blanks with an estate lawyer later, it’s worth it.

Confirm Executors

The executor role is daunting and most often done by an amateur. Usually, a friend or relative who kindly agrees to take on the role without really understanding the scope of the task. The process can take years and for the average person it often turns out to be more than they signed up for. Unless you are sure the designated executor is up to the task, it may be worth assigning a corporate trustee. In our experience, there is a provider called Concentra, a subsidiary of EQ Bank, that is first-in-class. We would be happy to make an introduction if you like.

Set Up Joint Accounts

If everyone is agreeable, it makes sense for parents and children to be joint on any or all accounts. Most importantly the main bank accounts. In the event of a death, unless joint, the accounts will be frozen without access. This can create all kinds of problems right down to paying for final expenses. A joint account would take all the pain out of that.

Spread the Wealth….Now

There are many ways to do this and avoid tax at the same time. First, a gift doesn’t cost anything. For financial assets, simply gifting money to children has no tax consequences and avoids probate. Gifting fixed assets like a cottage does have financial consequences but best to address early. Another method is through the designation of a beneficiary in registered accounts like RRIFs, RRSPs and TFSAs. There are some tax consequences but for the most part, they will avoid probate. Finally, a segregated fund has its advantages. It is like a mutual fund but offered by an insurance company, so it has a beneficiary and avoids probate. They also come with guarantees which provides some downside risk in the event that the holder happens to die when markets are down. If you would like to explore this more, we are always here for a call.

In Summary

These are some realities of life, like it or not, that we will all have to deal with. In our experience it is best to address these things up front to avoid unnecessary pain, both emotionally and financially down the road.

Photo by eberhard 🖐 grossgasteiger on Unsplash

The information contained herein has been provided for information purposes only.  The information has been drawn from sources believed to be reliable.  The information does not provide financial, legal, tax or investment advice.  Particular investment, tax, or trading strategies should be evaluated relative to each individual’s objectives and risk tolerance.  This does not constitute a recommendation or solicitation to buy or sell securities of any kind.  Wellington-Altus Private Wealth Inc. (WAPW) does not guarantee the accuracy or completeness of the information contained herein, nor does WAPW assume any liability for any loss that may result from the reliance by any person upon any such information or opinions.  Before acting on any of the above, please contact your financial advisor.