There’s more to wealth than money

While much of the focus in wealth transfer is on the financial aspects, there are also other important factors to consider, says Tiffany Harding, a wealth strategist with Partington Wealth Management at Ricardson Wealth in Toronto.

“Wealth transfer is about prioritizing your family’s well-being,” she says. “I know we focus on the financial, but it’s also personal, because for many people, wealth transfer is about preserving memories, and when I think about memories, I think about the family cottage, the house that you grew up in, the business that your family built over multiple generations.”

Transferring wealth between generations is also aimed at alleviating some of the hardships experienced by earlier generations, Ms. Harding adds.

“For example, helping adult children buy their first home, giving them a hand up to start a business or have an education. It’s a way that a family can provide for a continuation of those family values.

The best wealth transfer plans incorporate both the financial and the emotional preparedness for the next generation while addressing communication and family dynamics and avoiding the common pitfalls like entitlement or financial management, says Ms. Harding.

“Don’t overlook the family dynamics and personal emotions behind wealth transfer,” she adds.

She recommends having family meetings, writing family letters, and having conversations about wealth transfer to explain why a family member inherited the business, the cottage, a specific asset or received an unequal distribution. When communication breaks down or family members become estranged, letters can clarify the rationale behind the wealth transfer, providing emotional closure for the family member. It’s important for the beneficiaries of the wealth transfer to have the financial acumen to manage the wealth and have a plan in place to do so.

Ms. Harding also notes that the size of the wealth to be transferred is relative.

“I’ve had individuals and families that have one to two million dollars and were deeply concerned about passing on what they worked hard to build just as much as wealthier families,” she says. “The conversation is sometimes different depending on the wealth you have, but I believe that individuals and families that have real estate, investible assets, property, a business, life insurance, anything that they want to transfer either while living or as part of leaving a legacy should have a strategic wealth planning conversation with their adviser team.”

The conversation with advisers will help clarify goals, define what a client wants the wealth transfer to achieve and the timing, says Ms. Harding.

“Once you have the goal and the timing, you then layer on the family dynamics to ensure you’ve got family harmony and communication and have provided support to the next generation. You then look at the legal structures and documentation to make the transfers either during your lifetime or as part of your legacy planning,” she says.

Advertising feature produced by Randall Anthony Communications. The Globe’s editorial department was not involved.