By Tony Maiorino
When hearing or reading the words “wealth transfer,” many naturally think of it strictly in the financial sense—the moving or shifting of wealth and assets from one generation to another. While that’s entirely accurate, there’s another facet that should also be top of mind: the passing down of knowledge and values.
In Canada, the “Great Wealth Transfer” is taking place. With an estimated $1 to $2 trillion of wealth transitioning in the coming years from Baby Boomers to next generations, thoughtful and detailed planning is critical.
To effectively prepare for an eventual transition of wealth, families also need to focus on the softer, human aspects such as communication and engaging younger family members. Alongside planning, it’s the open dialogue and passing down of knowledge that will ultimately help ensure success with wealth transfer and legacy intentions.
Understandably, having conversations with loved ones about wealth and one’s wishes and intentions can feel uncomfortable, as can discussions about estate planning. For families with strong charitable values, or where philanthropy is a pillar in the family value system, charitable giving may offer a softer entry point for wealth transfer conversations, also opening the door to broader financial education for younger family members.
Here are some opportunities at different life stages to help embed charitable values across family generations, and approach philanthropic planning with a multigenerational lens.
Encouraging a charitable mindset and instilling values in younger children
For families with younger kids, there are many ways to include charitable giving as part of early financial learning.
For example, we often refer to the concept of “Save, Spend, Share” where the goal is to help children establish good financial habits and make the most of their allowance or money they receive. Using this concept, the intention is to teach children how to budget their money, allocating a certain percentage or amount to spending, saving, and giving to charity. Their funds can be divided between jars or containers to help younger kids understand the concept in a tangible way. Starting early with this type of learning and making it fun can encourage financial responsibility; it can also generate a child’s interest in philanthropy and giving back, helping instill the values of generosity and making a difference. Funds in their “sharing jar” can go to a charitable cause or organization of the child’s choice, with parents helping their children research and choose a cause or organization they’re passionate about and would like to support.
Each family’s approach will be different, but some may also want to consider other ways to foster charitable values through volunteering as a family, talking about causes that are meaningful to the family, or taking part in fundraisers or other charitable activities.
Incorporating family values and building engagement with teens and young adults
As children get older, there are many opportunities for families to further develop charitable values and participate in family philanthropy.
A few examples might be to encourage teens and young adults to research and recommend a charity that could be the recipient of a family donation, presenting the reasons they feel their choice deserves a portion of the family donation dollars.
Some families may also choose to have their teen or young adult children take part in family donation meetings, to see how the parents make decisions about charitable gifts. This creates the opportunity to have open discussions about family values, and help the youths develop a deeper understanding about how those values are connected to the family’s philanthropy.
A family’s charitable giving strategy or activities can also be good catalysts for creating charitable connections. This could be inviting older children to join the family on a site visit at a charitable organization, join an event hosted by a charity the family is supporting, or involve young adults in the parents’ charitable planning as part of overall wealth planning.
Connecting values with estate and legacy planning
As individuals move into the phase where they’re beginning to carry out their own estate and legacy planning, including wealth transfer, it’s important to consider how charitable giving is or has been pursued in their life, and compare it to their vision for giving as part of their legacy.
There are many different options and strategies for including philanthropy as part of an estate plan, and to meet goals for continuing to give beyond one’s lifetime. This may include bequests made through a Will, or ongoing forms of giving like establishing a private foundation or donor-advised fund. For parents, open family dialogue and communication become even more important, so values and intentions can be shared and effectively carried through for generations to come.
As it relates to estate planning, some assume their Will functions as the communication piece for their ultimate wishes and intentions in passing down wealth. While a Will does contain the decisions and wishes, it’s important to remember that it won’t necessarily offer family members the context behind decisions. This is another reason communication during one’s lifetime about legacy intentions and choices for philanthropic giving beyond one’s lifetime should remain a priority. Frequent conversations or family meetings can be so valuable in the process to help maintain family harmony and a collective motivation to carry on a multigenerational legacy.
Making connections with future generations
Finding opportunities to introduce charitable giving with family members of all ages, and striving to make philanthropy a family endeavour, can be instrumental in fostering long-term shared values and building understanding from one generation to the next on the impact of philanthropy and including it as part of wealth and legacy planning.
Beyond this, charities can also do their part to connect with younger donors to instill values-based education and financial literacy. With recent research by CanadaHelps showing that less than one-quarter of Canadian charities have a strategic plan for engaging younger audiences, there may be an important opportunity for charities to help ensure philanthropy is a value built from an early age.
Tony Maiorino is Head of Family Office Services team RBC Wealth Management Canada. Tony has over 30 years of experience advising high-net-worth clients in Canada and often contributes to publications on various topics within wealth planning. His team of over 250 professionals provides legal, tax and financial planning expertise to help advisor teams within the Wealth Management Canada segment deliver integrated wealth management and planning to high-net-worth clients and their families. For more information.
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