Transcript | Willing Wisdom


Sarah Widmeyer

0:17 

Welcome to Conversations on Wealth, a podcast dedicated to helping Canadians navigate the complexities of wealth with a multi-dimensional approach to planning and wealth management. I'm Sarah Widmeyer, Director of Wealth Strategies at Richardson Wealth, and joining me today is Tom Deans, author of ‘Willing Wisdom & Every Family’s Business’. Thanks for being here, Tom.


Tom Deans 

0:40 

Thanks for having me.


Sarah Widmeyer

0:42 

So the idea of writing a will is for many people a thought, worse than going to the dentist and getting some drillings, and I don't know why that is. And I'm hoping that as a result of our conversation today, we can explore that and help people get down to the business of writing a will probably the most important document they'll ever write in their life. Where did you get the idea behind Willing Wisdom?


Tom Deans 

1:09 

The book really was born from a lot of questions that I was receiving from my audiences from my first book. So I took my first book on the road and gave a speech about 500 times. And I was seeing patterns, I was seeing a lot of business owners who were in my audience asking the question, if I sell my business for 5 million, 10 million 50 million, I'll solve the business transition problem, but then I'll replace it with actually a far more vexing problem, which is, how do I transition $5 million to my two kids? No one gave me 5 million. When do I tell them how much I sold my business for? Should I give them some money now? Or should I leave it all to the end? Event after event, I was getting all these questions, super, super complex questions and emotional questions about how to transition wealth. And that really led me into a number of years of research, interviewing dozens of lawyers around this subject, and what I learned was shocking.


Sarah Widmeyer

2:07 

It is shocking. I know that one of the things I've learned recently is that estate litigation, you mentioned lawyers, estate litigation is the single fastest growing area of litigation in Canada, if not North America.


Tom Deans 

2:23 

Ya, there's not enough lawyers. Can you imagine?


Sarah Widmeyer

2:25 

No.


Tom Deans 

2:26

There's not enough lawyers to wade into the volume of families and dispute over not small amounts, we have record amounts of wealth being transitioned $205 million every single day in Canada. Today, tomorrow, and every day for the next 10 years. It's $755 billion dollars. It is a tsunami of money. So estates are getting larger and more complex. family dynamics are more complex, and yet culturally, we have not kept up with this complexity. In fact, we are still clinging to some very old ideas. I don't know if you know this Sarah, but at the cornerstone of most Canadian estate planning is this idea that secrets, family secrets, is what makes estate planning fantastic. It's crazy.


Sarah Widmeyer

3:12

It is crazy. You know, when you think about a will, I called it the most important document, I think you call it the most exciting document. Why do we leave the people we love most, maybe we don't love them that much, but why do we leave the people we love most with questions and confusion and conflict about decisions we make while we're still alive? And we don't, we don't share those decisions with our loved ones. We don't tell them, okay, I gave you the piano instead of that, because I know that your kids enjoy music, and that's why you got grandpa's piano. And you, you're going to get this other really important thing. I mean, that's a silly example, but why don't we take the time to bring our loved ones into the process of writing a will and explain it?


Tom Deans 

4:02 

I think at the center of that is fear. And I think there's also, it's a lot of culturally informed decision making. So we often repeat family systems theory which suggests that we repeat in our family what our parents did around this subject. And for many Canadians, we are the first generation of serious wealth accumulators. So as wealthy people now we're looking into their own family history and culture for clues on how they should transition their wealth to their children. There's nothing there, their parents didn't have a will, there's nothing to divide. So we have, we have a lot of wealthy Canadians flying completely blind on this subject, and as they are approaching their senior years where they should be feeling really accomplished, they're incredibly fearful, because they don't know how to engage their family on that one last subject, money, so they leave it alone, again, silence is a great destroyer of Canadian wealth. It's not families that gather once a year with their advisor and have a structured family meeting with an agenda and treat the transition of wealth in a very formal businesslike way, which many Canadian families are doing. They just want not reading about it, because who wants to read that story? Right? That's a boring story. We really are trending towards reading those stories in the Globe and Mail, where prominent families are lawyering up and fighting in public court. I mean, that makes for far more interesting reading. As we sip on our coffee and nibble on our toast and guff at how the wealthier are mangling their relationships and destroying their wealth, It's drama. It's the stuff of great film and modern art. But the reality is we're better than this. And we have to be better than this. Families need the courage to understand that they can work with advisors and advisors are offering this service to sit down and help a family talk about an orderly transparent estate plan where people know what's coming their way.


Sarah Widmeyer

5:58 

My brain just went as you were talking about some of the famous stories that are out there, but like Aretha Franklin, Prince, you know, no will, no estate plan.


Tom Deans 

6:08 

We could sit here all day. We think that wealthy people have access to smarter and have better lawyers, and therefore better advisors, and they're going to drive an estate plan. The reality is, lawyers will tell you this all the time. They draft wills, they remain unsigned. I don't know if you know this, Sarah, but recent studies show that if you actually draft a will sign a will and then hold it, you will immediately die. Studies, studies show this. You can see how absurd that sounds, right. But there is a lot of superstition informs the subject in a profound way. And what I'm trying to do my public lectures is to say, that is ridiculous. But more importantly, as families can gather and collaborate on the writing of a will, taking it into the domain of being the secret document, and actually viewing it as a collaborative undertaking, how exciting that is. And you know why it's exciting? Because part of that conversation is not only the division of assets on death, but it's actually a conversation about powers of attorney and advanced healthcare directives, which are answering the question who's going to take care of me when I'm old? One in three Canadians over age 65 are presenting some symptoms of dementia, it is a huge problem, we are living longer. And if we don't have answers to how we are going to age and who's going to take care of us, man, that's that's scary. So by engaging in discussion about the division of assets, the will and then rolling into that larger, more interesting conversation about who's going to take care of us. Do you see how I'm trying to unlock the self interest in estate planning? It shouldn't be scary. It should be actually the opposite. That's the exciting part of estate planning part.


Sarah Widmeyer

7:48 

Yeah, so my father passed in in May of last year.


Tom Deans 

7:54 

I'm sorry to hear that.


Sarah Widmeyer

7:55 

Thank you, and my mom has dementia, so it's been a fun 12 months. But prior to that, my brother who's also in the business, we sat down as a family and we did discuss the estate we did discuss, my parents were dead set that the cottage was going to be divided 50/50. And I don't have any interest in the cottage. And so my brother and I sat down on the dock, and we talked about okay how we're going to do this. And then we went back to mom and dad. And we said this is this is how we think we should do it. At that point, we also started to have conversations about dad's health was declining at that point, and mom was presenting some signs of dementia but wasn't diagnosed by any means at that point. But you're right, it did open up a conversation about okay, who's going to look after mom? What's going to happen with a cottage? How are you going to make this equal and fair, but in an unequal fair kind of way? And, you know, I think if there's one thing we did, right, we started to have those conversations four years ago, five years ago, long before the events of the last 12 months beset us.

 


Tom Deans 

8:56 

Right. So those conversations early and often making estate planning feel familiar. You made reference to the dentist. I remember the first time as a kid going to a dentist, I was terrified, I can still hear the sound of that drill in my mind. The second visit was a little bit better, but not really that much fun. Third one a little bit better. Fourth, fifth, I go to the dentist now I'm actually, it's like a, it's like a day at the spa. I fall asleep in the chair. It's so familiar. And that's exactly what I'm trying to suggest with estate planning when families can go ho hum, it's August 1st. This is when we have our family meeting every year where everyone gathers and we talk and we share our documents and our powers of attorney and healthcare directives and, you know, in every knows how it's going to go down. It just becomes familiar. And that's where the fear about aging and death recedes.


Sarah Widmeyer

9:45 

Yeah. So Tom, how would your family divide a cottage?


Tom Deans 

9:50 

Well, Sarah, you know, it's difficult to divide. Hard to divide assets like businesses, like cottages, it's pretty hard to take a pair of scissors and just chop them in half and give them to three kids. I mean, how can you take three kids who have three kids and jam 12 people into a two-room cottage, I mean, cottages are such a great example of those indivisible assets in an estate plan. So I think, you know, I've made reference to family meetings and the importance of family meetings with advisors present, and I think the cottage is where that asset needs to be discussed. So I'm a huge proponent of people saying to their children, look, we want to sell this cottage, do you guys want to buy it? And if you can't afford it, what we'd like to do is make a living gift, a living gift of cash to each of you. And those of you who want to return that money in exchange for the purchase price of the cottage, you see what we're doing, where we're actually getting the cottage into the hands of maybe the one person who is going to use it. Or the family finds out that actually no one wants it. But actually, if they're opposed to presented with the issue of having to buy it, to deploy their capital risk something often people like nah, you know, we're good. So it's unbelievable. So what we do in our family is, as we're aging, we're getting rid of those harder to divide assets, and we're moving to cash. It is really easy to divide cash at the estate level. Have you ever met anyone Sarah, who has inherited cash and been disappointed?


Sarah Widmeyer

11:21 

No, not yet.


Tom Deans 

11:23 

No, no, people seem to love it.


Sarah Widmeyer

11:25

So embedded in this conversation are some key tips that we could give clients listening, to starting this conversation, to helping transition and how the family assets and the family wealth will be handled and directives for care. What advice would you give clients listening to this? How do they start this conversation?


Tom Deans 

11:46 

I think they start by working with their advisor to have a facilitated family meeting, most families who tried to do this on their own without a third party in the room will blow off and give up, they're so overwhelmed, and they're afraid of opening up a can of worms, they think it's gonna, the meeting will go sideways. And in fact, instead of the family being left better with the transparency, they'll somehow caused damage and they won't know how to navigate that process. So I say start with your trusted advisor. In many cases, that's an accountant or wealth advisor, or both, and sometimes a lawyer as well. And it brings some gravitas to these meetings, it says we're a fortunate family, we've worked really hard to create wealth. And we've accumulated wealth by deferring consumption. On most families, that's how they do it, they have a business, they defer consumption, they save more than they spend. That's the old fashioned rules. And yet, when it comes to the transition of their wealth or estate plan, they step back, and they don't treat it with the same kind of rigor and discipline. So I know that the idea is catching on, because I know there's families that are doing this, again, we're just not reading about it. But there are hundreds of families that are doing a great job of this. And I think once they start and they have an agenda, and they start to tackle some of these issues, once the governance of the family is dealt with, you'll see that they'll almost all move into the one area where family meetings become super fun. And that's where they spend time on philanthropy. That's where they'll set aside some money as family and they'll work on selecting a joint cause. And it brings all the generations together to understand the value, the real value of wealth has goes beyond just consumption and investing. There's this whole other piece that can really ignite and excite the next generation and really connect them to the wealth in a profound way by understanding the stories.

 


Sarah Widmeyer

13:31 

Right. It's about storytelling.


Sarah Widmeyer

13:45

We have a consistent message on this podcast that we revisit often is around planning early planning with a goal in mind reviewing, updating, reviewing, updating again. When it comes to your will is it one and done? Or is it review it and what do you recommend?


Tom Deans 

14:02 

You know, I often hear lawyers say it's very important to update your will every five years. But I'll tell you, I don't understand that. It's the same thing with business owners to I hear that you say when are you gonna exit your business, sell your business? They'll say five years I come back next years, not four, it's always five. Same thing with wills. Listen, a lot can happen in a year. I say review your will annually. It is unbelievable. You could have a birth of a child the death of a grandparent to start a business sold a business a major liquidity event. Lots can change in a year, I know some people have changed their will three times. Now because they're impetuous because someone's in their family or in someone's out it's it's other life changes. So many people. Yeah, they get a well I put it in their drawer and forget about it. 1968 Bobby Kennedy was assassinated in Los Angeles, we know that was a pretty horrific event for that country. The good news is he had a will, bad news is who do you think is the executor was? Exactly, his brother, assassinated five years earlier, who was advising the Kennedys? Clearly it wasn't an advisor at your firm.


Sarah Widmeyer

15:05 

No, clearly. On that note, your will is extremely personal. Beyond the monetary or sentimental gifts, it can act as a way to extend your legacy and teach the next generation about the responsibilities that accompany wealth. Tom, if listeners were to purchase a copy of your book, Willing Wisdom, where can they pick it up?


Tom Deans 

15:29 

Well, they would be able to pick it up and receive free shipping at willingwisdom.com.


Sarah Widmeyer

15:35 

I think that's a great idea. That's a great idea for all of us. If you would like to learn more, please visit our website for articles and videos, or speak to an advisor. And remember to follow us on LinkedIn for a broad range of information on wealth strategies. Conversations on Wealth is available wherever you get your podcasts. Thank you, Tom. And thank you all for listening. And join me again next time.


The opinions expressed are the opinions of the author and readers should not assume they reflect the opinions or recommendations of Richardson Wealth Limited or its affiliates. Past performance may not be repeated. Richardson Wealth Limited is a member of Canadian Investor Protection Fund. Richardson Wealth is a trademark of James Richardson & Sons, Limited used under license.