Intergenerational wealth transfer or succession planning can be a daunting task, but if started early and included as a regular part of financial check-ups, it doesn’t have to be.
Trent Hamans, vice president of private banking and wealth planning with ATB Wealth, likens wealth transfer planning to creating a good meal.
“Having successful intergenerational wealth transfer is really much like having a great meal,” says Hamans. “You need to have a great recipe, great ingredients, and you need to have a great chef.”
If any of those three components don’t work well, then the meal will be mediocre. The same principle applies to successful intergenerational wealth transfer, says Hamans. (Story continues below player)
Recipes are typically written, and for wealth transfer, a will, personal directive or healthcare document, an enduring power of attorney, and a unanimous shareholders agreement are all good written components to have in place, explains Hamans.
“Only about 60 per cent of Canadians have a will, and it’s never too early to have a will done, it’s sort of like an insurance policy,” says Hamans, adding that once a person turns 18 or 19, they should have a will in place.
The ingredients for successful wealth transfer mean having some awareness of assets — business or investments — and knowing what liabilities could be incurred to another person.
“Estate planning and wealth transfer events are not just about assets and liabilities, they’re about relationships so you want to make sure you have great relationships with your family or whoever you want to have those wealth transfer events with,” Hamans says. Have conversations and keep communicating.
The chef who makes the great meal is actually a number of people — lawyers, accountants, and the executor of the estate will all provide assistance for successful wealth transfer and succession planning.
“Estate planning is important at any age, and it’s not a destination or a point in time, it’s a journey, so it’s really important that this be part of your financial routine,” Hamans concludes.