A trillion-dollar tsunami': Canadians grapple with unprecedented wealth transfer

[troutman]

Originally Posted by firebug

To be an executor, the big trust companies typically charge between 4 and 5% of the 1st $2-million dollars of Estate assets and then scale down above that ($25k minimum fee). There are some smaller independent firms that are less expensive... but still not a cheap option.

I do agree that for many Estates it's the wiser choice.

Also, most have a minimum threshold before they will even accept the appointment.

[DoubleF]

Originally Posted by Strange Brew

Oh for sure. But that is kind of independent of transferring assets to family members.

Overall most people with elderly parents are hopefully not in need of access to their future inheritance; if so they have bigger problems. By that stage of life you should have built the nest egg for your own retirement and that future inheritance can be used to help grandchildren successfully launch.

Eh, not quite. Basically the funds have to be unloaded from the RRSP/RRIF before deciding what to do. Basically for tax purposes you have to get rid of the tax deferral component associated with amounts in an RRSP/RRIF. After it's done, you can decide what to do again whether that's re-investing in a TFSA, non-registered, gifting to beneficiaries etc. doesn't matter.

That's why you want a plan to withdraw over multiple years to rid yourself of that tax deferral attribute to save tax (opposite of the RRSP deduction when it first went in) vs risking it all comes out at the same time and instead of saving taxes using the tax deferral attribute, you're paying more taxes instead if it's all taxed right away on a terminal return with no ability to rollover.

[Strange Brew]

Originally Posted by DoubleF

Eh, not quite. Basically the funds have to be unloaded from the RRSP/RRIF before deciding what to do. Basically for tax purposes you have to get rid of the tax deferral component associated with amounts in an RRSP/RRIF. After it's done, you can decide what to do again whether that's re-investing in a TFSA, non-registered, gifting to beneficiaries etc. doesn't matter.

That's why you want a plan to withdraw over multiple years to rid yourself of that tax deferral attribute to save tax (opposite of the RRSP deduction when it first went in) vs risking it all comes out at the same time and instead of saving taxes using the tax deferral attribute, you're paying more taxes instead if it's all taxed right away on a terminal return with no ability to rollover.

That is my exact point. Managing tax deferred accounts is something you need to consider independent of whether you're looking to proactively move money to family members.

Some of this happens automatically through minimum withdrawals. Those get to be rather large by the time the retiree is in their 90's.

[flamesfever]

Originally Posted by Sr. Mints

With this massive wealth transfer happening--a trillion in Canada so I'm just going to assume far, far more in the U.S. and other countries with similar demographics--what happens if a big chunk of that capital gets pulled out of the market?

If boomers are cashing out and their heirs use the dough to pay down debt, buy stuff, etc., instead of reinvesting, how could that shape the markets over the next 10, 20, or 30 years? That’s a lot of money moving around - not exactly a drop in the bucket.

I don't see it having a great effect on the market. For the most part, it will help reduce personal debt, put a roof over the youngest family members' heads, and provide enough funds to ensure the older members of the family won't run out of money before they die.

As for the very rich or those who are well off and trying to protect what they have, perhaps our Government should think creatively by floating a bond that rises with inflation and provides a modest return on investment, for the primary purpose of raising our share of military costs.

[WideReceiver]

Originally Posted by flamesfever

I don't see it having a great effect on the market. For the most part, it will help reduce personal debt, put a roof over the youngest family members' heads, and provide enough funds to ensure the older members of the family won't run out of money before they die.

….

Don’t those things require the sale of securities?

[flamesfever]

Originally Posted by WideReceiver

Don’t those things require the sale of securities?

Yes it does, but spread over a long enough time, I see the benefits outweighing any adjustment in the market. Anyway, if we raise taxes in the form of estate taxes, I can't see the money being spent by the Government more productively, or having a greater effect on helping people.

[Locke]

Originally Posted by firebug

To be an executor, the big trust companies typically charge between 4 and 5% of the 1st $2-million dollars of Estate assets and then scale down above that ($25k minimum fee). There are some smaller independent firms that are less expensive... but still not a cheap option.

I do agree that for many Estates it's the wiser choice.

Having done it a few times, dealt with it many, many, many times?

Being a Professional Executor? You couldn't get me to do that job at gunpoint. I'd tell you to pull the trigger.

I had a client who did that for a living and she was the most jaded person I've ever met.

After all the madness I've seen here at my office, we have a little motto:

"Inheritances make people crazy."

You see families go to war against each other...it can get ugly.

Man the stories...

[Bonded]

I am not looking forward to being the executor for my parents... I already know there will be some craziness even though it is pretty clear on the breakdown

[Locke]

I had one family, their father passed away, the mother was 'hands off' and there were three kids, two who I didnt really know and the third daughter was the CEO of their dad's company and the Executor of the Estate.

The two kids wanted to sell and collect and she apparently disagreed.

She was Executing the Will while simultaneously suing her siblings and contesting the Will in Court.

That was a meeting I'll not soon forget. It was...contentious.

Then there was one meeting where my client was the Executor for her friend and her phone didn't stop going off every 2 minutes.

"Where's our money? We want our money!"

Another one where the deceased left her entire Estate, house and investments to...her neighbour. Her kids were really rotten bastards. That must have been one really spared rod.

Oh! And I had one where the entire Estate was left to the Church. I didn't think people did that anymore but apparently its still a thing.

I keep telling people...I just do the Taxes. I'm not an Estate Lawyer.

But Inheritances make people crazy.

[blankall]

Originally Posted by Bonded

I am not looking forward to being the executor for my parents... I already know there will be some craziness even though it is pretty clear on the breakdown

It's almost a given that some people will get less money than they think is there and automatically be suspicious that you took a larger share for yourself. I'd recommend getting a professional involved. The fee of a few thousand dollars is probably worth the peace of mind. Even then, you need to make sure its a professional that everyone was involved in the selection process of.

[DoubleF]

There's a lot of people who think their estate will be "simple". Even if your intentions and overall actions over the years were "simple", there's just no such thing. We live in a complex society, taxation has gotten significantly more complex... a lot of this stuff is significantly more of a clusterF when it comes to sorting out the final things for a persons estate. Add in the stress and duress, it's rarely a calm and simple ordeal. Always figure out a way to make it all straight forward. I warn there's no such thing as simple anymore.

[Bonded]

Originally Posted by blankall

It's almost a given that some people will get less money than they think is there and automatically be suspicious that you took a larger share for yourself. I'd recommend getting a professional involved. The fee of a few thousand dollars is probably worth the peace of mind. Even then, you need to make sure its a professional that everyone was involved in the selection process of.

That’s a good idea. I will look into it when the time comes. One sibling is already penciling in what they think the estate is worth and coming up with ideas to spend it and the other wants their house and doesn’t think they will have to settle with the other siblings for fair value. It is going to be a headache

[CliffFletcher]

Originally Posted by Bonded

That’s a good idea. I will look into it when the time comes. One sibling is already penciling in what they think the estate is worth and coming up with ideas to spend it and the other wants their house and doesn’t think they will have to settle with the other siblings for fair value. It is going to be a headache

I imagine that’s a common source of conflict between siblings. Especially if one of them already lives in the house.

Can the courts mandate that a beneficiary has to vacate and sell their primary residence in order to split the estate?