Leading advisor explains how he manages difficult estates by having the hard conversation
David Little recently had a client join his practice with a large estate and five children. When Little, founder of Blue Oceans Private Wealth with IA Private Wealth in Burlington, On, asked his client which child was named as the executor of his estate, the client told him all five were.
The client felt that if he left any of his kids out, they would feel slighted and that could cause acrimony. Little explained to the client that, in fact, switching to a professional executor with maybe one of the children as a co-executor, would likely result in a smoother process and less liability for his kids. Given that in Ontario the executor could be personally liable for any errors, he might not want to saddle his kids with that level of risk. Perhaps more importantly, by appointing an impartial executor and building a robust estate plan, that client can help avoid or at least minimize any family conflict that could arise after they pass away.
“Over the next sixteen years, the largest wealth transfer in global history is going to occur,” Little says, emphasizing the importance of this kind of planning. “Baby boomers are passing away and leaving their estates to their kids, and we’re preparing for that because we see stories like these among almost all of our clients.”
Little is currently pursuing his Certificate in Estate Planning and Trusts Strategy (CETS) with the Canadian Securities Institute as part of his ongoing preparation for this wealth transfer. As he prepares himself, he takes steps to prepare his clients, addressing subjects of death and inheritance which he finds many North Americans are uncomfortable with.
Little uses two books as entry points to these conversations. The first is Estate Planning through Family Meetings: Without Breaking up the family by Lynne Butler. That book encourages frank and open conversations about wealth and inheritance in formal family meetings. Little will often proctor those meetings for his clients’ families to ensure these sometimes-difficult subjects don’t turn acrimonious.
The second book is Willing Wisdom: 7 Questions to Ask before you Die by Dr. Thomas William Deans. That short book, Little says, offers his clients a framework from which they can build a frank discussion about their estates.
To encourage these open conversations, Little shares anecdotes from his 39+ years as a financial advisor. He shares stories of clients who avoided these conversations, only for significant portions of their wealth to end up in the hands of an ex-son-in-law they barely knew. He can share how one client’s son developed early onset Alzheimer’s, and might have been replaced in the will by his ex-wife if adequate steps weren’t taken.
In Little’s experience, many of his newer clients haven’t been having estate planning conversations with their advisors. He might ask them simply if their will is up to date, hear them say yes, and find out they last updated the will in 2008. He can refer them out to an estate lawyer to make that update quickly, but he believes that given the scale of the wealth transfer already ongoing, more Canadian advisors should be asking these questions.
“I think advisors have to look at the relationships they have, and provide their clients with the services they are looking for, because in a lot of cases, clients don't even know that they're not getting those services,” Little says. “So to me that that's what makes our practice successful after 39 years, we don't do much one dimensional or limited planning with clients, we want to make sure we're doing all of the things for them retirement income planning, and then, of course, the intergenerational estate planning. Our job isn’t to fix things at the last minute, our job is to point out long-term problems and show clients that we know how to resolve those problems.”
