Estate Evolution And How It Affects Planning

There appears to be several financial stages people pass through in life.

Building wealth

This stage begins as soon as you begin to earn money. It involves tradeoff. Bearing mind you can only use a dollar once, you must balance income, lifestyle, debt and assets. It is not easy and unexpected events make it variable. Still we seem quite focused on achievement of the wealth goal. Wealth provides choices and having choices is where independence arises.

When people build wealth for their own safety, use and enjoyment they are careful and planful.

Do you know of anyone who is accumulating significant wealth who is not tax aware? Or who is not aware of investment costs. You have likely noticed that they are all risk aware and refuse to take risks they cannot understand and manage. They don’t expect to win every time, but they do expect to lose a little when things go wrong and to make a great deal when they go right.

Use and Enjoyment

As people approach the end of their working life, they come to know they can live on the income from their financial investments. Retirement is in the midst of a transition from acquisition to use. The tools of acquisition give way. The key values becomes predictability and security.

People  generally become less risk tolerant and less assertive about increasing their wealth beyond their need for income and security. They remain tax aware. They tend to be willing to buy time by hiring help for tasks they may have once done themselves. Few are do-it-yourselfers except in the case of a hobby.

They welcome leisure, travel, friends and familiar relationships like a club or church.

“Being rich is having money; being wealthy is having time.” Margaret Bonnano

They value family and especially grandchildren. A few years ago I had a client who had recently sold his business and who was thinking about the tax advantages of living on a tax free island in the Caribbean. At this point he had not talked to his wife about it. I had one question, “Are the grandchildren going with you?” After discussing the idea with his wife and her likelihood of moving away from their family, his attitude became more of the “it’s only money” form.

In retirement people realize money is more about what it can do than it is about what it is.

That’s a wrap.

May people who were once very careful and resourceful in building wealth become careless when it comes to retirement income and estate planning. Like retirement is not a point but a continuum within which thinking changes. People who cannot see their assets in any context but their own income and security miss many valuable options. If you assume you will hold all your wealth until death and then distribute it evenly among your children miss worthwhile alternatives that help your multi-generation family.

Remember how you worked to build wealth and what lengths you went to in order to keep it after you earned it. In the wrap stage few people spend the same time or trouble to preserve what they own. Not for their own use and not for the use of their family or charitable heirs. In many ways the dynamics of the situation are different, but that can work in your favour. The future is more predictable at 75 than it was at 40. If nothing else you know pretty well what your lifestyle is and how it will not change much. Medical issues being the principle concern. You already own the assets you use. Home, cottage, condo in the sun or ski country, cars, furniture, art, jewelry, antiques and more. 40-year-old you didn’t have that yet. Cash flow to live is all that’s left to care about and as lifestyle winds down because of inability or disinterest, it doesn’t inflate a lot.

The opportunities:

  • Move money sooner once security needs are know and looked after
  • Invest based on the heirs time frame instead of your own. You would be amazed how many elderly people have been counselled to own low yield bank notes instead of something more dynamic. The issue is the advisor is looking at guarantees because you are old. If you have surplus capital, it makes no sense. What security is there in investing excess capital poorly? Think about this. If you spend $10,000 a month and expect to live 20 year, your spending need is $2,400,000 with no income form the money. If you invest in guaranteed things yielding 1.5% after taxes, $2.1 Million will solve your spending needs. If you think you might need $500,000 for additional medical costs, add that. $2.6 Million. If you have $5,000,000 investable now, why would you choose to invest the extra at 1.5%?
  • Think about stewardship. The idea is to manage the excess for the greatest benefit of those who will eventually own it. That is not invest in short term bank deposits.
  • Discover how second to die life insurance works. It is the cheapest way to pay for estate costs like income taxes and fees.
  • Think through which assets should go to which heir. Many of your assets have emotional value. Equal is an illusion. Equitable is quite fine for most situations. It is easy to divide “fungible assets” like investments and bank accounts. Not so easy with others. Fair is good enough.
  • Communicate with your executors and heirs. Keep in mind, you won’t be there to help administer the estate. How will they know everything they need to know? Who could access your crypto wallet?
  • Think charitable thoughts. The tax situation in your estate will not be like it is year-to-year. You should know how it is different and how you can magnify the value of a gift.
  • Know about generation skipping. Capital at 30 is much more useful than capital at 60. Some situations must be handled with care. In other cases, the grandchildren are like you were at that age.

The bits to take away

You worked hard and smart to acquire what you own. It is less smart than you know to be careless late in life.

There are ways to get better answers that you will not think up on your own.

Be sure your will addresses your complete wishes.

Designate capable executors. It is not a trivial job and you should not count on them to solve problems you couldn’t solve why you were alive.

Think about a pro forma probate, just to be sure you haven’t done something that cannot work.

Knowing what you want to happen in general is actually harder than getting it to happen. Think it through.

Help me, please. If you have found this useful, please subscribe and forward it to others.

I build strategic, fact-based estate and income plans. The plans identify alternate ways and alternate timing to achieve both spending and estate distribution goals. In the past, I have been a planner with a large insurance, employee benefits, and investment agency, a partner in a large international public accounting firm, CEO of a software start-up, a partner in an energy management system importer, and briefly in the restaurant business. I have appeared on more than 100 television shows on financial planning, have presented to organizations as varied as the Canadian Bar Association, The Ontario Institute of Chartered Accountants, The Ontario Ministry of Agriculture and Food, and Banks – from CIBC to the Business Development Bank.

Be in touch at 705-927-4770 or by email at

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