How Canada’s most affluent families future-proof their wealth

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Amin Kanji is well-acquainted with the challenges and complexities involved in estate planning for Canada’s wealthiest families.

As executive director of family enterprise advising at CIBC Family Office, which is part of CIBC Private Wealth, Mr. Kanji has helped some of the country’s most affluent families build their estate plans.

He says that while most Canadians may not have the same level of complexity in their assets, there is plenty they can learn from the way these families approach estate planning.

“Many Canadians have been fortunate to accumulate a good amount of assets that will last, if managed well, past their immediate lifetimes,” Mr. Kanji says. “They can be more thoughtful about their estate plans [so they can] take care of themselves, support their children or grandchildren, and maybe even support some causes important to them.”

Have the conversation early

According to the CIBC Wealth Transfer poll, nearly half (48 per cent) of Canadians who have wills – or plans to create one – have not yet discussed their estate plans with their family¹. But Mr. Kanji says that in his work with Canada’s wealthiest families, communication with beneficiaries is a key part of the process.

Many affluent families own significant family enterprises and some may have inherited wealth from previous generations, both of which have tax and legal implications for the estate plans of current and future generations, he says. Whether family members are actively involved in family assets or not, transparency around estates is a must.

“The reality is, where significant assets are transitioning from one generation to the next, it’s good to involve the family before those decisions are made,” Mr. Kanji says.

Clients vary in how much they disclose and when, but he advises them to at least ensure beneficiaries are prepared if something happens, particularly if there’s a lot of complexity around the assets. As well, the person or people that clients have selected as executors or trustees of their estate should be informed.

He also recommends having discussions in advance if some assets will be shared between beneficiaries. “It’s good to get in front of the family to discuss what the particular purpose of those assets are, how those assets will be governed and if there’s a vision the creators of wealth have for the future generational intent of those assets,” he says. For affluent families, estate planning is an ongoing process that evolves over time.

These conversations aren’t always easy, Mr. Kanji says. But when individuals have more and larger assets, they can benefit from enlisting a team of trusted advisors to help them analyze their situation and communicate their intentions to their families.

Help the next generation build confidence

Another critical piece of the estate planning process for affluent families is preparing the next generation for the wealth they’ll be inheriting, Mr. Kanji says. For example, some clients give their beneficiaries limited funds in their early adult years to start learning the fundamentals in budgeting, investing and working with professional advisors.

When families are passing down a family business to the incoming generation, education, mentorship and gradual involvement in business decisions can prepare them for their new responsibilities, he says.

“That doesn’t mean everyone has to get an MBA or work in the family business, but they should have some financial fluency around making decisions in business, and good financial information to review to make sure the business is managed appropriately,” he says.

Mr. Kanji recalls meeting with a couple who have a large, family-owned enterprise. They had decided their two adult children, who had built careers outside of the family business, would inherit the business as part of their estate plan. The enterprise would be run by professional management and the children would assume an ownership role.

As part of the bespoke estate planning process with his client, Mr. Kanji met with their children to help them learn about the responsibilities they would be assuming as owners, the activities they would need to be involved in and how they could evaluate and oversee the business.

To ensure the children felt confident, Mr. Kanji set up educational seminars where his client, the company’s founder, shared his knowledge of the business, the company’s key operations and the skills that would be necessary for future leaders. The client’s trusted advisors also explained the financial structures and assets that the family held outside of the family business.

“The clients disclosed a lot of information to prepare the upcoming generation, should they need to step in,” says Mr. Kanji.

This kind of formalized, structured preparation can be an excellent way to take emotion and uncertainty out of the estate planning process, he adds.

Incorporate your values into your estate plan

Mr. Kanji says that there is much to learn from the thoughtful ways affluent families plan for the transfer of assets to their family members. These strategies may include ownership structures, establishing trusts, gifting or through a will.

But beyond the strategies for transferring assets to your loved ones, it’s always a good idea to consider ways that you can reflect on your values before distributing wealth, he says.

“It’s something leading families have been considering for a long time, because being connected to significant wealth could lead to lower motivation, entitlement, mistrust or just being overwhelmed.”

Canadians now have more opportunities to incorporate their values into their estate plan, says Mr. Kanji, including planning philanthropic gifts during their lifetime and at their passing. A trusted advisor can help their client determine the best, most tax-efficient and most meaningful ways to leave a legacy on the world.

“[It’s about] becoming more open to what we can do with wealth outside of the immediate family,” he says. “It’s an outlook on social justice or taking care of those in need and making a lasting impact with [your] estate.”

This article is part of the ‘Navigating the new wealth landscape’ series, offering unique perspectives and personal stories at key wealth milestones, highlighting the benefits of partnering with CIBC Private Wealth experts.

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Advertising feature produced by Globe Content Studio with CIBC. The Globe’s editorial department was not involved.