What issues concern you most about your estate? Perhaps it is avoiding taxes and probate fees. Perhaps you are worried about how financial markets could affect your legacy. For others, it may be selecting the right executor, trustee or guardian. It’s also not uncommon for procrastination to take over so that all these concerns just get pushed forward year after year.
According to Roy Williams & Vic Preisser authors of “Philanthropy Heirs & Values there are the four major “risk perceptions” that people are most concerned about with their estate plans.
“What I think Will Bite Me?”
- 41% - Estate & Financial Planning Risks
Concerns include making a mistake in our plans, choosing the wrong executor, trustee or guardian etc.
- 36% - Economy Business & Financial Market Risk
Concerns about the future of the stock market and economy and how it will relate to the final value of their estate.
- 16% - Political & Tax Risk
Concerns here can be on the tax owing on the estate and future political changes that could change the value of the estate.
- 7% - Family Dynamics & Relationships
Concerns here relate to interfamily problems that arise about how the estate assets are distributed.
If your estate planning concerns are similar to those shown above, you may be in for a surprise. According to the authors, the actual problems estate difficulties incurred were far from those originally anticipated and are shown below;
“What Bit Me?”
- 60% - Lack of Communication & Trust in Family
- 37% - Unprepared Heirs
- 3% - Failures in Financial & Estate Planning, Taxes & Investments
Whereas an incredible 93% felt their biggest concerns would be estate planning mistakes, market/political risks and taxes, at the end of the day, this represented a miniscule 3% of actual estate problems. The real problems were due to a lack of communication with heirs and the heir’s unpreparedness for their inheritance.
Between 2016 and 2025, Canadians will pass approximately $750,000,000,000(1) to the next generation. My guess is that not nearly enough time will be spent discussing and preparing the next generation for this massive windfall.