Category Archives: Final Wishes

Estate Mistakes from 4 stars that died too young

Estate planning is for everyone – avoid Estate Mistakes

The goal of estate planning is to leave what you have to whom you want to.at the least possible cost in terms of administration and taxes. But, no one can successfully predict how long they will live; illness and accidents can happen at any age & when least expected. That’s why estate planning is important no matter the age (or stage). Too many families are caught off-guard and found unprepared when an incapacity or death happens and proper estate plans are not in place.

Estate planning is also not just for the wealthy; it’s important that proper estate planning & instructions be discussed and documented no matter the state of wealth. Indeed, estate planning can often mean more to families with modest wealth, because they can afford to lose the least.

I think there are profound lessons worth passing along from the estates of 4 very famous young stars who did not leave complete estate plans in place. Hopefully, others young or old, rich or not so rich can learn from these mistakes.

Phillip Seymour Hoffman (1967 – 2014)

A much-loved, versatile & celebrated actor, director, and producer of film and theater who won a best actor Oscar for his role in “Capote” in 2006. He died of combined drug intoxication. He was 47 years young.

Estate Mistakes:

  • His entire estate was left to his partner who was the mother of his 3 children,but he failed to create trusts for his children.
  • Because his partner was not his wife, the estate did not transfer on a tax-free basis.
  • By not setting up a revocable trust, his estate was subject to probate which caused further delays and costs and made his family financial situation, very public.
  • Estimated cost of estate mistake: $15 Million of an estimated $35 Million estate

Amy Winehouse (1983 – 2011)

The controversial yet undeniably talented British singer and songwriter known for her deep vocals and eclectic musical taste, died of accidental alcohol poisoning . She was 27 years young.

Estate Mistakes

  • She died “intestate” meaning that she did not leave a valid will.
  • Her estate passed by law to her “natural heirs” being her divorced parents. Her ex-husband who she remained very close to until her death; received nothing.
  • Her father was appointed as administrator and incurred considerable personal and financial burden in settling Amy’s complicated estate which included 6 music companies. The resulting cost to settle bills, debts and taxes ate up the majority of the estate estimated at $7 Million.

Heath Ledger (1979 – 2008)

The brilliant Australian actor and director died of accidental overdose of prescription drugs. He had just finished filming his performance as the Joker in The Dark Knight for which he won many awards after his death including an Academy award. He was 28 years young.

Estate Mistakes:

  • He did not update his will following the birth of his daughter, Matilda
  • The beneficiaries in his will were his parents & 3 sisters with no mention of his daughter or his daughter’s mother
  • A filing of probate by his daughter’s guardians in Australia sought part of the estate held in Australian trusts worth approximately $20 Million. Much publicity around family infighting ensued until Leger’s father agreed to financially support his granddaughter

Paul Walker (1973 – 2013)

This young “heart throb” was best known as the star of the Fast & Furious movies and tragically (and ironically) died in a high-speed car accident that lead to a fiery car crash. He left a 15-year-old daughter and a tangled mess of finances & questions. He was 40 years young.

Estate Mistakes:

  • He established a revocable living trust for his 15-year-old daughter many years earlier, but he was noted as the only trustee with no successor trustee named. This has led to much debate between his own family and the mother of his daughter as to who will oversee the trust given that his daughter is a minor.
  • He had not updated his will in 12 years, a period over which his net worth grew significantly. Given the fact that his will had not been updated, there were no provisions made for his girlfriend of 7 years, who he intended on marrying.
  • While he established a revocable living trust for his daughter it was not funded fully during his lifetime so there has been considerable expense and publicity incurred that could have been avoided. It’s a common mistake to set up a trust but not do the actual transfer
  • Estimated cost of estate mistake: $5 Million of an estimated $25 Million estate

Better and more complete estate planning would have saved the estates of these young stars, millions in estate taxes. Better financial organization would have saved the families additional grief that comes with tracking down details and settling final accounts.

Better financial organization and peace of mind are goals behind LegacyTracker. When better organization is in place; better and more complete planning can take place.

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.

Safeguard your family

Safeguard your family from What If scenarios

Talking about Money has historically been considered as “UnFun” but these days it’s critical. What’s even less fun than taking about Money? Money and Death.     Yes. Thinking through all of the unpleasantness that comes with death is considerably UnFun but being unprepared for a sudden or unexpected death in your family is even more so.

Statistics indicate that women will often outlive their husbands but that’s not always the case. We all know Stuff happens & that includes BAD Stuff. That’s why it’s important that each spouse take an active role in their household/family finances and know where stuff is and what they have.

Others have talked about this in their columns or blogs like the Blunt Bean Counter in his blog post “Stress Testing your Spouse’s Financial Readiness if you were to Die Suddenly” and Roma Luciw in her Globe and Mail Article Why you should stress-test your finances for a sudden death 

The bottom line is about safeguarding your family from additional grief & expense in an already stressful time by ensuring that both spouses have all the important information necessary to manage through such a time.

Let me say that I’m quite familiar with the kinds of scenarios that can occur when a death happens. As an Accountant, I have helped many overcome all sorts of challenges that have been brought about by an untimely death of a loved one (not that there is such a thing as a timely death)

I’m also quite personally aware of the stress that comes from being the “CFO of the family“. That would be the spouse that manages & holds all of the important details relating to the lives of your family. Your family might work that way as Lots of families do: One spouse is the CFO & manages all of the important financial/legal/estate paperwork & the other spouse operates (sometimes blissfully) unaware of all of those important details behind your household finances. It’s not a good position to be in no matter which role you have. As the CFO in my family, I still worry that my spouse is not going to know where everything is and whether he will “leave money on the table” It’s a pretty UnFun responsibility to be the one solely responsible for the “info”.

And now you know some of my personal secrets & some of my motivation behind LegacyTracker. it’s about ensuring that my family and yours have their important details of living life documented, safeguarded & shared with those who need to know. Details like:

  • Where the will and power of attorneys are
  • Having a readily available & accurate list of assets with account numbers & contact information
  • Having a current and comprehensive list of passwords for your digital assets and non-digital assets
  • Knowing the location of important legal agreements like income tax returns and real estate deeds
  • Knowing exactly how much insurance you have and who are your insurance contacts
  • Having the opportunity to write and share details about your final wishes/arrangements

Nothing can be left to chance.  It’s up to each of us to safeguard our financial legacies and that’s how LegacyTracker can help. That’s what we’re about.

 

Ethical Wills: An important part of a Legacy & LegacyTracker

 

The results of a 2012 Allianz Life Insurance Study may surprise you. 86% of Baby boomers (age 47-66) &  74 % of elders (age 72+) agree that family stories are the most important aspect of their legacy, ahead of personal possessions (64 % for boomers, 58% for elders) and the expectation of inheritance for financial well-being           (9% for boomers, 14% for elders).

These results do not vary greatly from their study of 2005, that indicated that family values and life lessons were indeed the most important part of legacy before financial assets. That study outlined the 4 pillars of legacy as being 1) Values and Life lessons 2) Personal Possessions of emotional value 3) Wishes and Directions to be fulfilled and 4) Financial Assets/Real Estate

An ethical will captures the non financial part of a legacy. which make for, alongside the financial assets leaving a legacy as opposed to an Inheritance. Ethical Wills are the intangible form of a legacy that can make a real difference to heirs and that’s perhaps why they are being talked about more often in recent years as part of overall wealth transfer planning. An ethical will is not legally binding or enforceable as opposed to a will or living will; it is more concerned with the sharing of principles, values , life lessons, family histories and guidelines that an individuals may want to be pass along to heirs. It can be an informal letter or a long autobiography or a book, or even a video.

A good read on the subject is by Susan Turnbull of Personal Legacy Advisors in her book, The Wealth of your Life: A step by step guide for creating your ethical will.  Ms. Turnbull’s book provides an introduction to the concept of an ethical will and lays out a 5-step path for creating a written document or recording.  Her website is also a valuable resource

From Ms. Turnbull:

“It is a heartfelt expression of what truly matters most in the client’s life….Whether a client actually creates an ethical will or not, it is a measure of value of recommending one…An ethical will opens a door for an advisor to start a bigger conversation about estate planning”

It seems reasonable that Financial Advisors who open up conversations about ethical wills may find that they are then able to better serve the next generation of their existing clients. It provides an opportunity to reach out to that next generation and reduce the risk that comes with the unprecedented intergenerational wealth transfer that has already started while doing “Good” for clients.

Overall, I think most of us understand, that we are all worth more than the money we leave behind and that’s why we have included a place for Ethical Wills inside LegacyTracker

Connect with us to find out about all of the important parts included in LegacyTracker

Here’s a sample and some additional information in the form of FAQ from John Kador’s article on Ethical Wills from wealthmanagement.org 

ethical-faq

ethical-exercises

Advance Care Planning – Questions/Answers

April 16th is National Advance Care Planning Day, an initiative sponsored by the Canadian Hospice Palliative Care Association and Carenet (Canadian Researchers at the end of life network)

It’s a day for Canadians to have or begin a conversation with a loved one about their wishes for end of life care. Here’s some information & resources to get started.

Resources: Advanced Care Planning options  ON Advanced Care.Guide  Advanced care planning in Ontario  & help making that plan and having that conversation here

And yes. We have included a place for these plans and for sharing these plans inside LegacyTracker

Advance Care Planning FAQ

Remembering (Gratefully) Jim Flaherty

James Daw wrote a piece for the Toronto Star that appeared there Oct 4 ,2010 where Daw asked Jim Flaherty about some of the financial wisdom that he had shared with his sons as they were growing up. The boys were 19 then and preparing for a `life on their own. It`s tragic that a short 3.5 years later they have now lost their Dad who after a life of TRUE public service had his life cut short when he died last week at the relatively young age of 64. Canada owes him much.

No matter your particular political preference you may be most agree. Jim Flaherty was an honourable & outstanding individual and the Truest of TRUE Public Servant. He made great sacrifices for Canada and Ontario and made them better when he could have been working in the private sector making as we know, 4-6 times the salary. He represented Canada extremely well on an international level being highly respected & regarded for his work during the financial crisis. I had the opportunity to meet him a few times and worked on one of his projects. He was a great role model for how Public Servants and those elected should behave and I’m terribly saddened by his passing. It’s a tragic loss for Canada, but obviously, for his Wife and his 3 young(er) boys, John, Galen and Quinn. He deserved a long and happy retirement. He died too young.

Jim Flaherty will be laid to rest today. Today also happens to be both Advanced Care Planning Day and Talk with our Kids about Money Day. It seems fitting to share these 4 pieces of advise that  Jim Flaherty said he had shared with his sons in that article by James Daw. Read the entire article here 

jim_flaherty_andsons

 

1. Education is vital

That’s the first and most important thing. Once you have a good education, the world is your oyster; really. You can live anywhere in the world and move from job to job. You can retrain and be trained.

Half of the jobs that people will work at in the next 10 or 20 years don’t exist now. So the idea of having some focused, narrow education, to go do this particular job for the rest of your life is unlikely.

Once you are well educated, and you are not afraid to work – because work is important, not just to make money, but to have character and to feel good about yourself – then save. Employing one’s skills and aptitudes creates a sense of purpose and accomplishment. Being useful is good for the soul as well as the pocketbook.

2. Spend less than you earn

I am a big Warren Buffett fan, and understand the miracle of compound interest. I think my sons are starting to as well, making money at summer jobs and so on. They are starting to see they can invest and earn interest and have that interest multiply.

These are the fundamentals and it will help later when they save for retirement. I try to encourage them to use tax-free savings accounts (TFSAs), because a dollar saved now is worth such a multiple over a lifetime.

TFSAs or registered retirement savings plans? Tax free accounts are more flexible. Then once you do that you go RRSP. But it is virtually an open field with TFSAs. In 20 years, most capital gains should be immune from tax if people use them properly. And governments will do nothing but raise the (annual contribution) limit over time. No government will abolish tax-free savings accounts now we have created them. They wouldn’t have the nerve.

3. Buy property

Real estate is a good long-term investment. But pay off your mortgage as soon as you can. Investing in the purchase of a principal residence early on is a tax-free way to accumulate capital. Then move on to another principal residence. Renting doesn’t produce capital gains.

The (boys) have grown up on a large piece of land in a fairly large house. I expect their experience (as adults) will be smaller and greener, probably more urban and transit focused. (Galen and Quinn were up early this summer to catch the GO train to get to summer jobs at Bay Street investment houses by 7 a.m.)

4. Be frugal

(There are) risks with debt, especially credit cards. We have given (the boys) credit cards in the hopes they will learn to manage them, because so many people get into so much trouble with credit card debt. The tendency some young people have is to over-extend themselves on credit to buy fancy houses and cars which they can’t really afford if, for example, interest rates rise. So, it’s important to avoid over-extending on credit, especially on depreciating assets such as cars.

I would also really discourage them from buying expensive homes and cars. We will see what they actually do when they get out of university, whether they buy expensive cars. (Flaherty senior drives a Chevy) I consider that such a waste; money you could use doing other things.

He will be missed tremendously by Canada but most particularly by his wife Christine and sons, Quinn, Galen and John. A Great Father and a Great Canadian gone too soon.

Again you can read the entire article here 

Read more about Talk with Our Kids about Money day here 

Read more about Advanced Care Planning here 

April 16 is National Advance Care Planning Day

As Canadians learned this week, Life can get complicated too fast. We or a loved one can meet with a tragic event suddenly.

The National Advance Care Planning in Canada initiative is challenging Canadians to tell their stories on April 16, 2014.

Have a conversation. Speak up. (and yes, you can document & share those plans inside LegacyTracker)

Advance Care Planning

 

Estate Mistakes – Ted Williams Baseball Legend

Estate Mistake: Document your final wishes & if you change those wishes – make the change formally & share the info so that information can be accessed quickly. Advanced Directives will help you outline those wishes between cremation, burial or something else as well as your medical care and end of life care

Baseball great Ted Williams by all accounts was a private person in life and it’s quite likely he wished to remain that way in death. Unfortunately, for Ted Williams, his Estate Plan also has become legend. In his will, Ted Williams said he wished to be cremated & his ashes sprinkled at sea off the coast of Florida.

However, a long-standing & bitter rivalry between his 3 children, Bobby-Jo, John Henry & Claudia made that impossible when the children from his 2nd marriage produced a grease-stained, handwritten note stating that he wished that his body be cryogenically frozen after his death. It was unclear if the handwritten note was written by Ted Williams or whether or not he had sufficient capacity to make that change to his final wishes.

His eldest daughter fought to have his body unfrozen and cremated, but gave up the fight when she ran out of money.  No one will ever know the truth behind the decisions made by or on behalf of Ted Williams-much has been written & is still being written about this particular case which was definitely not the intention of Ted Williams.

LegacyTracker helps families and individuals better prepare themselves for emergency situations that all happen to be on the rise including death, incapacity, Identity Theft, Natural and Physical Disasters. With the added feature of Alerts & Reminders, we hope LegacyTracker will help facilitate important family discussions that too many have put off, concerning estate planning and final wishes. The flexible sharing feature built into LegacyTracker allows individuals & families share any or all of their information with loved ones or Advisors. 

Life is…. complicated. Death more so. Get Organized.

Orginally published Jan 13 2013

Stop procrastinating…Get your stuff together (please)….

This is a poster published first in the Wall Street in 2011 – It’s a good one..with an article from Saabira Chaudhuri titled “The 25 documents you need before you Die”  It’s cdrtainly an attention grabber.

25 important documents article

It’s a great poster and a fascinating story which talks about the financial consequences that befalls your family and loved ones if you fail to keep all your documents and important papers in order. In the US where they track, report and actively look for owners of unclaimed funds they know that the toll is great. $33B (now $58B) approximately in unclaimed bank accounts and other assets like paid up insurance policies.

You may or may not know (maybe this is your first visit here) that Canada is not so lucky. Only 2 provinces have any real unclaimed intangible property legislation in place (Alberta & Quebec).  That’s not the way it should be but that’s the way it is right now in Canada.

That sad fact, makes it even more critical to ensure that your records are organized and shared to make sure you reduce the financial risk that comes from not being so organized. So yes. Please stop procrastinating around this topic.

Read the article from the Wall Street Jounal here