The Last Cool Thing You Will Ever Do.
Soooooo the last year or two has been extremely trying and an incredible test of fortitude and relationship for my father and I. We’re trying to wrap up a number of projects that due to circumstances far out of our control, are taking a lot longer to finish off than anyone involved would have expected and certainly will have liked.
We’re tired.
You’re tired.
We’re COVID fatigued.
Even though the markets are up and we’re making hay, we’re still grumpy.
So I thought it would be a super good time to lighten up a little. Talk about something that we can all smile at and speak of lightly. Something to laugh at that is still worth a blog post from a financial advisory firm.
That topic... really more of a concept, to be honest, of course, is: Planning for your death! It’s the last cool thing you’ll ever do.
When I die, which hopefully is 2-300 years from now, and with modern medical science and advances to preservatives and modern chemistry, there is no reason I can’t make it. When I die, I want my organs to be harvested and to be either filled with dynamite and launched into the stratosphere while cover bands of my favourite bands play all my favourite songs all at once. A cacophony of sound and light and so on.
Or!
Simply donate my organs to those in need and bury me in the forest, covered in bacon so my energy can be transferred to nature and at least some part of me lives on. Maybe a very personable wolverine will find me and show me a good time… who knows?
I assume most of you don’t have anything so grandiose or strange in mind, but hopefully, your family and friends find themselves at an event where they can celebrate you in the fashion they know you would appreciate, rather than drag you because you weren’t prepared financially for your demise.
Outside of the blinding thievery of the ceremonial death and burial industry, dealing with their insane costs and potential family disputes over the grace and style in which we see our loved ones off forever, we have to deal with the wishes and estates of the people who leave us behind.
One thing I will suggest, which is obvious, is to have a will. A will that is worked on by a lawyer, and updated regularly to reflect the potential estate value and plan in place. A will that is executed by a third party. A will that is communicated to family members on a regular basis as changes occur.
In our line of work, we deal with death. Our end goal is to ensure your estate is dealt with in the most efficient and simple way possible. Unfortunately, rarely does this occur for myriad reasons. In our opinions, communication is the most oft ignored and most important tool in the estate tool box. People just don’t enjoy speaking of death, but so much time, anguish and angst can be saved by simply communicating clearly with your closest what you wish.
But communicating what you want is only part of the process. Communicating how they ought to go about dealing with things is far more important. While you are alive, you should be dealing with the how on a regular basis, for two reasons;
to ensure your loved ones understand exactly how to handle the various assets you hold and how to disperse them
to ensure, that whereveer possible, any and all debate about ownership is taken care of by the asset, not by the will, the executor, accountants, lawyers, banks or courts.
If number two has you 🤨, it is likely that you don’t understand how to bypass the people that cost your estate and heirs money after you pass, and that is ok because our industry has done an abysmal job of explaining it to you.
There are certain assets that must pass through the estate and probate of the will before they can be passed along to the estates inheritants: physical property and assets, cash, mutual funds, bank accounts, etc. Most people understand that, and simply accept there is no way around it. And in a lot of cases this is true. A bank or mutual fund company will not release account funds to beneficiaries of the estate until probate is finalized and the wish that is a will becomes a legal and binding document.
Ever tried to deal with a surface lease for an underground resource asset? yikes.
A will is just a wish. It is not really anything but that until it is probated, which is why it is important for it to be drafted by a lawyer, updated regularly, communicated regularly and handled by a third party at death. Removing the emotion, or as much of it as possible during an emotional time is extremely important.
But what about assets that bypass the will and probate?
For the context of this blog post I will focus on the life insurance and segregated fund contracts we offer every single day at Financial Value Inc.
Life insurance contracts, when a named preferred beneficiary and/ or beneficiaries are listed, bypass the will and probate and are paid directly to the names listed in the contract, tax free, nearly hassle free.
As long as the estate isn’t listed as beneficiary, everything works smoothly for the beneficiaries of that or those contract(s). A signature or two and she’s all wrapped.
Segregated Fund contracts work in a similar manner in that they, as long as a beneficiary that isn’t the estate is listed in the contract, will bypass all the things that strip value, dignity and time away from you while you try to grieve. That said, the proceeds of Segregated Funds may or may not be taxable in the beneficiaries hands. (A topic we can cover another time)
Believe it or not, this is a great gift you can give to the people you care about. Simply removing the aspects that cause strife after a death, where you can, and providing the peace of mind to your successors is such an incredible load off their shoulders.
They can simply deal with loss and not lawyers, bankers and accountants.
They can move on, rather than dealing with incompetence and excuses as to why the estate isn’t moving ahead. Saving days, weeks, months and even years of staring at what you once owned that they would like to move into their hands as your legacy to them.
The will can take care of the physical assets, and generally if communicated well, the wishes are accepted, even if begrudgingly, by the people who will be given these gifts. Little things like jewelry, or emotional trinkets and totems can cause rifts in the family, but nothing and I do mean nothing breaks a family apart like a lack of communication.
Placing a buffer between you and your family, is an important step and roll to create for the estate. A financial advisor, such as Dad and I, can act as that buffer in communication with the family. We give the advice, we communicate the most efficient use of that advice in a non-confrontational and non-emotional manner so that everyone can understand their rolls and the wishes on the table. Helping to iron out the details.
A third party executor/ trix, can then communicate their roll better and more efficiently act on the estate, when the time comes.
Money; being at least in our opinions, the second largest factor in the fracturing of the family unit, should be put in the most efficient vehicle possible for the transfer of funds to the estate heirs. Simply bypassing the estate and directly paying the beneficiaries is a huge time and money saver.
Life insurance contracts act as tax shelters for capital, they can act as bank accounts and as assets to lend against. But in the end, and there is an end for all of us, even if it is a few centuries into the future, they are vehicles to move vast amounts of wealth from one generation to the next for a relatively nominal cost over a lifetime.
Segregated Funds act in the same way; a smooth transition of wealth from one generation to the next, that just isn’t offered by other investment or cash accounts that exist in Canada today. Again, a nominal fee is all it takes to achieve such a great gift.
Briefly, I would like to hit on the fees. You see our thoughts on fees in our industry all over this website. Wealth-simple and quest trade can talk low fees all they want, but when it comes to performance while you are alive, good luck with that. Even bad financial advice will earn you more than 3% compounded more per year over a life time, NET OF FEES. Good advice and strong management will net you far more, and a ‘named and preferred’ beneficiary listed on a Segregated Fund contract will save a ton of time, money and effort in the end.
Are Segregated Funds more expensive than Mutual Funds, Bank Accounts and or Self Directed Accounts? Yes. But cost is what you pay, value is what you get, and there is far more value in the Seg Fund contract than you will find elsewhere. You’re here because you’re not receiving value where you are right now, perhaps focus on what actually matters instead of what commercials tell you to.
Did I mention Segregated Funds can guarantee your capital up to 100% at death and maturity? That we can reset those guarantees to guarantee growth made over the years? That they don’t comply with the same arbitrary “put you in a box” suitability nonsense every other investment security in the country does? That they supply creditor protection over those assets by literally segregating them from the rest of your assets?
I have now!
Speaking of creditor protection, because the estate or any individual or group can not contest the Insurance contract or segregated fund contract, the beneficiaries can be assured that they will be paid what they are owed, regardless of disputes, even from the estate itself.
We find an absolute ton of value in these benefits not found anywhere else, and the cost for them is truly nominal. Plus, not to brag too much, we also outperform our peers regularly and often, which only adds value to the contract and plan.
Wouldn’t it be great to simply plan ahead and make sure that your family can move on and celebrate you after you pass, rather than staring at a bunch of bills and costs incurred by your death?
You and your advisor(s) ought to ensure that your family and friends understand your wishes, understand your estate, who gets what and how to accomplish your wishes in the most efficient manner possible.
It’ll be the last cool thing you will ever do.
Thanks for reading, leave a comment below to let me know what you think.
Darris Cameron,
President & COO
Financial Value Inc.