Category Archives: Estate Professionals

Worries of the Wealthy (HNW) in 2014

 

US Trust 2014

The 2014 version of the U.S Trust Annual Insights on Wealth and Worth was recently released. The annual survey provides insight on the wealth management challenges confronting high net worth and ultra high net worth individuals in the US.

High Net worth is defined for the purposes of this survey as being $3 Million or more in investable assets. The 2014 survey sheds light particularly on the growing challenges and needs that come with more complex family dynamics including multi-generational and extended family situations. Worries of the Wealthy.

Some highlights that we found particularly interesting and some of the challenges that LegacyTracker can help with….

The Top 5 risks to family wealth

Divorce, Addictions, Untimely death or disability of a primary income earner, medical problems  and disagreements over inheritance or distribution of family assets

Family circumstances US Trust 2014

“The modern American family is more diverse than it once was, adding to the challenges of wealth management for high-net worth investors and their advisors. Changing family structures and roles among multiple generations of immediate and extended family members affect the way family members interact, communicate  and manage their wealth”

Ranking the most important reasons for having an estate plan

US Trust 2014 Reasons for Estate Planning

How important are Financial Legacies ?

While 60% of those surveyed thought it was important that they leave a financial legacy, 96% of wealthy parents are concerned that their children will be mature enough to receive an inheritance until at least age 25 and 37% think the ideal age is between 30-34. That might explain why only 38% of wealthy parents have fully disclosed their financial status to adult children over age 25.

Executor choices

Perhaps some troubling challenges on the horizon?

  • More than 3/4 of those surveyed have named a family member or friend as executor
  • Most often, individuals name their spouse as an executor but…
  • Nearly a quarter of those surveyed had not yet chosen an executor or trustee
  • 22% have not named a trustee because they have not established a trust

Families and Friends as Executors US Trust 2014

Few consider capacity of executors

Executor challenges

There were many challenges noted by those that have served as an executor or trustee. The 2nd biggest challenge cited was…having access or knowledge relating to where the records and important information was kept.  We would suggest that this issue adds to the biggest challenge noted being, the time commitment of time require to execute a will. Time is money and time can also add to the grief already being experienced in the case of a loved one who has been named as executor which happens a majority of the time even in high net worth families.

 

US Trust 2014 Survey on Executors

Yes. LegacyTracker can help with some of these challenges; important documents & information is critical & so is the sharing of that information as required. Our built in alerts & reminders are all about ensuring that the proper documentation & information is safeguarded.

 

Read the full US Trust Survey US Trust 2014 survey on High Net worth individuals

 

 

Estate Planning for Digital Assets

UFADAA makes estate planning for digital assets a little easier

Thanks to the Uniform Law Commission, (an US National Non profit/Non partisan organization that supplies “ready to go” legislation) comprehensive provisions are now available relating to Digital Assets.  That should help make estate planning for digital assets a little easier going forward if it’s utilized by individuals US states.

The Uniform Fiduciary Access to Digital Assets Act (UFADAA) makes legislating digital inheritances easier and can alleviate the burden and the heartbreak that can come when families are unable to access simple things like digital photos or messages from loved ones that have passed away. The purpose of UFADAA is to vest fiduciaries (executors, guardians, agents powers of attorneys etc.) with the authority to access, control, or copy digital assets, while respecting the privacy and intent of the account holder.

The Uniform Fiduciary Access to Digital Assets Act solves the problem using the concept of “media neutrality.”  If a fiduciary would have access to a tangible asset, that fiduciary will also have access to a similar type of digital asset.  

The State of Delaware has taken the lead already and became the first US State to enact such legislation by enacting the Fiduciary Access to Digital Assets and Digital Accounts Act this past week. It gives the account holder the power to decide what happens to his or her digital assets in the same way they do for physical or financial assets. At present, that power lies with the tech and media companies in control of the assets. 

There is hope that all 50 states will adopt the Uniform Fiduciary Access to Digital Assets Act so that access to content will be honoured in the way that the user would wish. The Act can be referenced here :  UFADAA-7-17-2014

In the meantime, Google does provide a tool to help users deal with the problem which they have called Inactive Account Manager . You can also keep up to date with any progress or changes by way of a blog we discovered authored by well-known US estate planning lawyer James D. Lamm. His blog is called digitalpassing.com

Unfortunately, it seems there is no such update on What Canada is doing on this subject (Sorry).

Inter generational wealth transfers

Preparing for wealth transfers in the trillions – a strategic imperative

It’s a lot to lose

The looming inter generational wealth transfer may receive much attention in the news but how much real preparation is taking place in the financial services market for this transfer? Not reaching out to the spouse, or children & grandchildren (heirs) of existing clients presents a real risk. Bank of America in 2011 noted that assets transferring to a spouse move to another firm 55% of the time while assets transferring to children move as much as 98% of the time.  Bank of America aptly noted the strategic imperative of reducing the risk of inter generational wealth transfers; “a very real risk of long-term erosion to their business

How much ?

Life expectancy, rising health care costs , changing tax legislation and increasing debt levels aside, the estimated value of Inter generational wealth transfers over the next many years is in the Trillions and comes by way of 2 different phases.The so-called “Great Transfer” is an estimated $17 Trillion + that is expected to shift between the “Greatest” generation to Baby boomers. A 2nd shift  (“Greater transfer“) is another $42 Trillion + that is expected to move from Baby Boomers to Generation X.  Added together or alone, these transfers present a high level of risk for financial advisors/firms to lose assets. An estimated $30 Trillion of this total of $59 Trillion is expected to shift in the next 30 years.  During the peak of the wealth transfers taking place (between 2031 to 2045) it’s estimated that 10% of the Country’s wealth will change hands every 5 years.

Where’s the risk?

Estimates vary based a lot on wealth and income but most studies indicate that too few families (less than 35%) have discussed estate planning with their primary financial advisor. Why don’t more families take the time to discuss and prepare? Certainly, the myth of estate planning only being for the wealthy continues to prevail but so does procrastination and the ‘discomfort” of the topic generally.

At the same time, why are financial advisors not more actively engaging with clients & their heirs about estate planning matters? Some evidence suggests that most advisors happen to be Baby boomers themselves and feel that they lack effective ways to both reach out to the children & grandchildren of their clients and engage proactively with clients to establish multi generational wealth transfer plans. That’s not good (!) Estate planning discussions provide great value to clients, their families and financial advisors.

Engage/Do Good/Enhance Value/Retain

Research shows that at least 60% of inter generational wealth loss is caused by poor communication and a lack of trust within the family. Encouraging clients to talk with their family members about their expectations and values before the estate planning process begins is a meaningful way to provide value. We’ve written about the idea of Ethical wills over and above traditional will planning in other posts on this blog. (We provide a place for both in LegacyTracker)

Coordinating family meetings provides a great way for advisors to introduce themselves to the next generation and show that they care. Clients appreciate an advisor that cares and demonstrates customer advocacy on a regular basis & so will the families of those clients.   By offering a technology solution that helps clients simplify, safeguard and share their important financial, legal and estate information, financial advisors and firms can demonstrate customer advocacy to the entire family. Being organized will make a real difference for an entire family in enhancing their level of emergency preparedness.  Our branded solution can ease the potential burden on a family should an emergency arise; reducing the risk of additional grief, delay or cost that often comes when families are unprepared.

LegacyTracker can also help facilitate important discussions between both Advisors & Clients as well as between Clients & their family members about important estate planning matters including final wishes. Such discussions will enable Clients and their families to more proactively prepare for the next generation & and will enable financial advisors and their firms to show additional value.

That’s a core mission behind LegacyTracker –  providing a way for Financial Advisors/Firms to reach out to their Clients/Families which also helps those Financial Advisors/Firms to ultimately hold on to assets that might otherwise move. LegacyTracker is also a technology solution that will have particular appeal to younger clients or family members who are on the look out for a technology to make their lives less complex & more mobile.

What if funeral planning became more like party planning ?

Would more of us talk about Final wishes & Funerals ?

Party Planning or Funeral PlanningFunerals are changing

The Toronto Starrecently ran a good article on Funeral planning that we thought was well worth sharing. Actually the Star has run a good series of articles on Death & Dying that are well worth a read. 

But one article stood out, as surprisingly more uplifting than the typical reading about this particular subject matter that often does not get spoken of (!) It was uplifting in a spirited way and that’s because the good news is that Traditional funerals are being transformed & that means the funeral industry is being transformed as well.

Traditional funerals are apparently on their deathbed 

Less of the 2 days of visitation variety, followed by an internment at the cemetery. Yes. that definitely sounds like my own Dad’s funeral, which for my family & I’m sure most, seems like more like an endurance test.

Some of that change is coming from consumers who are looking for more choice and less cost these days. cremations have certainly become more popular than burials (moving from just 4% in the 1970’s to 60% currently). Family members are looking to mourn less and celebrate more, the lives of those loved ones who have left, remembering in different ways which do not always include a traditional religious ceremony.

  • A wine and cheese instead of a traditional funeral ?
  • Ashes scattered across the Pacific Ocean instead of a traditional burial plot?
  • Body dealt with in the most inexpensive and environmentally friendly way

The cute lady pictured and quoted in the article, Margaret Adamson, 82 years young said it best “I feel whatever of me remains will be in the memories of my family and friends, and how the body is treated is not important to me. Once I’m gone”

 

Count me in. (Does my spouse follow this blog?)

 

Here’s the best part almost of this article being about more uplifting final wishes and funeral planning….It’s easier to print it or share it by sending it to someone you care about or who cares about you to start a conversation if one has not already begun. Too often, those kinds of conversations (like about estate planning, funerals, final wishes, WILLS etc.)  are delayed and that increases the risk that a conversation does not happen and more grief in the form of more stress and trying to guess occurs.  

You can read the entire article here 

LegacyTracker wants you to talk about your final wishes, plan for what if scenarios and share that information with your loved ones. We’ve included a spot for those plans and wishes right inside the Estate section of LegacyTracker

Live Well. Live Long.

Age of the Customer means it’s about ‘them’

I thought a recent article by Aldo Cundari (of Cundari) was worth passing along and summarizing,. Although his article “How Did we get to the Age of the Customer is tag lined with “how digital turned talking to consumers on its head”   so there’s your clue

How did we get to the Age of the Customer?                  (because yes we are there)

Aldo attributes the evolving state of marketing that happened over the course of the last few years to the age of digital where all consumers can now do their own research on what they want  and research reviews & options like never before. That makes “Shopping Around” quite different and that makes marketing products & services a lot different too; not to mention some additional BIG challenges like social media, hyper competition, product proliferation and globalization added in to the mix.

So, if we are shopping differently now, (becuase this does sound a lot like the way I shop), .then..the question becomes more about…

How to best serve those potential Customers when they arrive and ask their final questions to ensure they do become your Customers…

Indeed, the customer is empowered now like never before with information in order to purchase. Whereas, 10 years ago, it was more about the Information Age, it’s now evolved into the Age of the Customer. They’ve got the info  which has lead to the disruption and change in the way consumers behave, purchase & engage and because of that, they have higher expectations. The consumer is driving now and leading and he warns, Organizations who ignore this shift will suffer.

Here’s the difference of the Past vs the Present as Aldo Cundari has presented it:

The past:  

aldo 2

 

 

 

 

The present:

 

aldo 3

 

 

 

 

I like how Cundari summarizes what all this means: now that the Customers are in the driver’s seat as he says:

Marketers need to re-evaluate their approach and look deeper to understand, empathize and help customers meet their needs through their new purchasing and decision-making behaviours.  I think that sounds a lot like Customer advocacy. 

We appreciate Customer Advocacy and we think your Customers will as well. LegacyTracker demonstrates Customer Advocacy by helping them meet a lot of challenges by helping them:

  • Simplify & safeguard their details
  • Become more empowered with those details in order that they can become more proactive about their Financial & Estate Planning,
  • Enhance their level of Emergency Preparedness and
  • Facilitate important conversations with loved ones & family that they too often delay.

Connect with us about LegacyTracker 

 

Read more: Strategy Online – How did we get to the Age of the Customer

 

 

 

 

Law Society Unclaimed Trust monies UP

Yet another indication of the alarming increase in Unclaimed Financial Assets I keep lamenting about…The Law Society of Upper Canada just released their 2013 Annual Report.

Unclaimed Trust Funds increased by $454,215 in 2013 to $3.2 Million

 

Law Society of Upper Canada Unclaimed Trust Funds

Unclaimed Trust Funds (Page 2)
Unclaimed trust funds continue to increase, now totalling $3.2 M as compared to $2.7 M at the end of 2012. These are trust monies turned over to the Society by lawyers who are unable to locate or identify the clients to whom the monies are owed. To date, monies returned to clients from the fund have been nominal. By statute, the Society administers the unclaimed trust funds, in perpetuity, and is entitled to reimbursement
for administrative expenses to a limit of the annual income earned on funds held. Net income, if any, is available for transfer to the Law Foundation of Ontario (“LFO”). To date, administrative expenses have exceeded income and no transfers to the LFO have been made

More from the 2013 Financial Statements regarding  Unclaimed Trust Funds…

10. Unclaimed Trust Funds (Page 22)
Section 59.6 of the Law Society Act permits a member who has held money in trust for, or on account of, a person for a period of at least two years, to apply in accordance with the by-laws for permission to pay the money to the Society. Money paid to the Society is held in trust in perpetuity for the purpose of satisfying the claims of the persons who are entitled to the capital amount. Subject to certain provisions in the Act enabling the Society to recover its expenses associated with maintaining these funds, net income from the money held in trust shall be paid to the Law Foundation of Ontario. Unclaimed money held in trust
amounts to $3,195,000 (2012 – $2,747,000).

Source: Law Society of Ontario 2013 Financials here 

The Boom for Financial Tech around the World

 Global Fin Tech Investments hit $3 Billion in 2013

Accenture’s newly released 16 page report  ‘The Boom in Global Fin Tech Investment’ highlights that:

  • Global fin tech financing has tripled over the past five years
  • Silicon Valley based companies account for 1 of every 5 Fin Tech deals and 1/3 of funding allocated to Fin Tech
  • Europe accounts for 13% of all Fin Tech funding globally/15% of all global deals
  • However, London is now outpacing Silicon Valley on the basis of 5 year growth
  • The UK (specifically London) and Ireland-based companies taking the lion’s share of Europe’s Fin Tech deals.
  • The UK and Ireland represented 53% of Europe’s Fin Tech deals and more than 2/3 of Europe’s Fin Tech funding at 69%

Accenture on fintech

To get Accenture’s 16 page report go here 

 

Even millionaires are procrastinating

This from a 2010 article ” Wealthy Worry about Next Generation” in Advisor.CA magazine by John Powell 

Referencing a study by RBC Wealth Management of Canadian Millionaires:

  • 58% of millionaires think their children are facing an uphill battle when it comes to managing their finances
  • 49% don’t have confidence in their children’s abilities to manage the inheritance. 
  • 67% feel it is their responsibility to preserve wealth for future generations and leave their children with a healthy legacy,
  • But, 39% have no estate plan to speak of.

Contradictory?
Tom McCullough President/CEO of Northwood Family Office chalks it up to people just being human and not wanting to face what the future might hold for them and their loved ones. 

“Estate planning is complicated. It is about the future. It is about death. They don’t want to have to make those decisions now,” he explains. “I think it is one of the most important things people need to do is to sort through their personal affairs and their estate but there are a lot of folks who don’t do it, don’t get to it or don’t know how to do it.”

Thane Stenner, Founder/Director of wealth management at Stenner Investment Partners, an independent private family office group within Richardson GMP Limited, is not surprised by RBC’s findings as it mirrors the results of his own company’s research from 2006. which highlighted the top concern of the high-net worth clients as being how their children would handle the family finances in the future.

“What is interesting is there still seems to be some procrastination taking place. That is not surprising. Most successful, wealthy families are busy. They have a lot on the go. Estate planning or issues like that are never seen to be urgent and that is one of the reasons why a lot of the times quite candidly, that estate plans are not updated and are not properly papered,” says Stenner