Darlene Garat, Garat Financial Group
When we talk about intergenerational wealth transfers, the biggest worry is making sure that future generations don’t squander the legacy that you’ve worked so hard to build. Too many people have just enough money to be stressed out about this, but not enough to warrant never-ending professional fees to manage the problem after they are gone.
And this is a real threat. Too often, when your money lands in the hands of well-meaning friends, family, and business partners, the funds are treated like “found money” — spent quickly and without much thought. So assets that were supposed to eliminate debt, fund an education, or transfer a business are not available when needed, having transformed into Disney vacations and a new quad in a new truck pulling a new boat.
These fears are often ignored until it’s too late to do anything about it. The key to managing this issue is to get ahead of the problem by putting a sensible plan in place well in advance. A Legacy Plan can allow you to reap your rewards now, and structure what is leftover to provide an equitable solution for all concerned.
Simply having a will or a power of attorney is not enough. Yes, these are absolutely vital documents that everyone must have, but they are not enough to ensure that your lifetime of wealth building doesn’t get blown on expensive toys. You want to leave a legacy that will last and go where it is intended.
Thankfully, there are many products that can be used as part of your strategy to avoid this common pitfall of passing wealth down to a generation that didn’t work for it. Aside from setting up multiple trusts, there are ways to have one heir get an income and another a lump sum payout. You can also avoid your money ending up in the hands of an in-law you suspect may be hanging around waiting for a payout. Or a grandchild’s share being spent by the parent.
It is trickier these days with revised legislation on what you can and cannot do in regards to leaving an inheritance. Unfortunately, you may have to leave every child an equal benefit to avoid your estate winding up in a court and disappearing into years of legal fees – but there are ways to save one heir without sacrificing another.
If you are concerned about the transfer of your assets to the next generation, and the next, a thorough review of your options with a Financial Advisor licensed in both insurance and other investment products will offer greater clarify, and peace of mind.
Darlene Garat and the team at Garat Financial Group Ltd work with their clients to create real financial security. Contact them at 250.287.2310, or visit www.garatfinancial.com for more information.