My name is Mark Goodfield. Welcome to The Blunt Bean Counter ™, a blog that shares my thoughts on income taxes, finance and the psychology of money. I am a Chartered Professional Accountant and a partner with a National Accounting Firm in Toronto. This blog is meant for everyone, but in particular for high net worth individuals and owners of private corporations. The views and opinions expressed in this blog are written solely in my personal capacity and cannot be attributed to the accounting firm with which I am affiliated. My posts are blunt, opinionated and even have a twist of humor/sarcasm. You've been warned.

Tuesday, July 18, 2017

The Best of The Blunt Bean Counter - Taking it to the Grave or Leaving it all to your Kids?

This summer I am posting the "best of" The Blunt Bean Counter blog while I work on my golf game. Today, I am re-posting a July 2011 post (originally written as a guest post for The Canadian Capitalist) on estate planning and the four groups (at the risk of stereotyping) that people seem to fall into, when dealing with their estate.

Next week I will have a re-post of  a blog on accessing the capital dividend account for those of you that have private corporations and then a three-part series on a true summer topic - the tax issues surrounding the sale and/or transfer of your cottage.

Taking it to the Grave or Leaving it all to your Kids?


I am often engaged to provide estate planning. Many "older" Canadians have amassed great wealth (some just through the sale of their home and/or cottage). A 2006 Decima Research study estimated that over one trillion dollars in wealth could be transferred between 2006-2026. After twenty-five years of discussions regarding the distribution of wealth, where an estate will clearly have excess funds when the parents pass away (to be clear, this post is only discussing situations where you are very certain you have more funds than you need to live, not situations where you may have excess funds when you pass away, but are not secure enough to distribute while alive) it is my opinion that the parents should consider partial gifts during their lifetime.


It is my observation from the 25 years of meetings that people form four distinct groups when it comes to distributing their excess wealth:

1. Those that will take their wealth to their grave (or leave it to their pet Chihuahua)
2. Those that will distribute their wealth only upon their death
3. Those that may not be able to afford their grave (as they give and give to their children)
4. The most common, the middle ground of the extremes, those who are willing to distribute their wealth, but in many cases harbour concerns their wealth will be “blown” or lead to unmotivated children.

In this blog, understanding my opinions may be diametrically opposed to some readers, I will talk about these varied groups.

Taking it to the Grave and Leaving Nada to Your Family


For those who wish to take their wealth to the grave, there may be an altruistic or philosophical reason. However, there is more often than not, a deep rooted family issue, and the chill in the room makes it very clear that advisors should stay clear of delving into these family issues (when I initially wrote this post, I was criticized by a reader for saying the advisor should stay clear in these cases. I now think they were correct. I can think of a specific case since I wrote this post in 2011 where I challenged a client on this and they made a change to their will not because they really wanted to, but because the change could possibly help avoid litigation down the road, despite it being distasteful to them). 

Distributing your Wealth upon your Death


In the case of those who wish to distribute their wealth upon their death, the issue is typically philosophical. That is, one or both of the parents feel that their children need to make their own way in the world and that leaving them money during their lifetime will do their children a disservice or destroy their moral compass. This is a touchy area, but I often suggest that if the parents feel their children are well-adjusted, they should consider providing partial inheritances. A partial inheritance can facilitate a child’s dream, such as climbing Mt. Kilimanjaro while the child is physically able, or assist with the down payment on a cottage. The selling point on partial distributions is that the parents can share vicariously in the joy of the experience they facilitate.

Giving your Kids too Much while Alive


In the third situation, the parents spend every spare nickel on their children’s private school, dance lessons, hockey teams, etc., while younger and then assist in buying houses, cars, etc., when their children are older. In these cases I suggest the parents pare back the funds they spend on their children and/or make the children contribute to their own activities. It is imperative the parents impart upon their children that they are not an ATM and that there are family budgetary limits to be adhered to, often easier said than done.

The Balanced Approach


The majority of families fall into the last category. They are willing to distribute their “excess” wealth while alive, but in many cases harbour concerns their wealth will be “blown” or lead to unmotivated children. Dr. Lee Hausner, an advisor to some of the wealthiest families in the United States, suggests in various articles of hers that I have read, that parents do not transfer money during career-building years so the children learn to be productive members of society. Children should be taught they have choices to make (ie: distribute money for one thing they want but not three things they want) and they should learn to be philanthropic amongst other things. I think this advice stands on its own whether you are one of the wealthiest families in the United States or just a family that has been lucky enough to accumulate more assets then you will ever require.

How one distributes their wealth is an extremely private issue and each individual has their own thoughts and reasons for their actions. However, in my opinion, where you have the financial wherewithal, you should consider making at least partial gifts during your lifetime.

This site provides general information on various tax issues and other matters. The information is not intended to constitute professional advice and may not be appropriate for a specific individual or fact situation. It is written by the author solely in their personal capacity and cannot be attributed to the accounting firm with which they are affiliated. It is not intended to constitute professional advice, and neither the author nor the firm with which the author is associated shall accept any liability in respect of any reliance on the information contained herein. Readers should always consult with their professional advisors in respect of their particular situation.

Monday, July 17, 2017

Book Giveaway Winners!!

Thank you to everyone who completed the financial/wealth survey linked to my June 19th blog post. The response was great.

The winners are:

1. Richard S.

2. Kelly A.

3. Ken S.

4. Bruce R.

5. Cindy H.

Since I do not publish last names for privacy purposes, there may be more than say one Richard S. However, if you were a winner, you will have already received an email informing you that you won a book and asking you for address details. So if you are a Richard S. that did not win, sorry about that.

Tomorrow I start my "Best of the Blunt Bean Counter" series for the summer.

Monday, July 10, 2017

Gone Golfing for the Summer of 2017

This summer, I will again be posting a “Best of The Blunt Bean Counter” blog each week; so I can spend some time golfing and enjoying the good weather with my family. I am really looking forward to a golf trip to Cabot Cliffs in Nova Scotia later this summer, as it was ranked as the best new course in the world in 2015 and is now constantly ranked as one of the best courses period in the world. I am sure this trip will result in a blog post with pictures.
European Club Golf Course Ireland

As this is now the fourth year in a row that I have posted my "Best of" during the summer, as I stated  last year, maybe at this juncture, a more appropriate title should be; "The Sort of the Best of The Blunt Bean Counter".

Anyways, you can read them again if you wish and if not, I won't take it personally.

Next September, will mark the blogs 7th anniversary. As I noted in my blogger got the blues post last fall, it is getting difficult to keep this blog fresh and for me to keep writing each week or so. I thus will use the summer to consider a couple suggestions people have made to me to re-energize the blog and myself (including one from my son and daughter to do a sort of Blunt Bean "let me tell you" editorial type post), so we shall see where that goes. While I am navel gazing, enjoy your summer.

Monday, July 3, 2017

What High Net Worth People Really Want from Their Financial Advisors

In my experience, the best investment managers that my firm and clients work with stress three particular investment themes.

They are as follows:

1. Maintenance of lifestyle
2. Protection of Capital
3. Growth of Capital

I don’t think the above mentioned priorities were picked out of thin air. These are the true concerns of high net worth individuals and were discussed in a 2012 Forbes Magazine article titled  “What High Net Worth Investors Really Want" by Andrew Klausner. While this article is now almost five years old, I still find it as applicable today, as when it was written five years ago. I would also suggest that even if you are not a high net worth person, these priorities would still be important to you.

The Forbes article was based on the results of a Cerulli Associates/Phoenix Market International survey.  The survey found the top nine 9 things that high net worth individuals are looking for from their advisors (and the percentage of respondents that listed each item as being the most important) were as follows:

1. Maintain lifestyle in retirement – 31.4%

2. College education funding – 19.6%

3. Protect current level of wealth – 14.6%

4. Aggressively grow wealth – 14%

5. Leave an estate for heirs – 9.8%

6. Charitable giving – 4.2%

7. Minimize income and capital gains taxes – 2.4%

8. Improve household cash flow – 1.9%

9. Better manage market risk – 1.9%

It is somewhat surprising, maybe even shocking, that beating the market is nowhere to be found on this list. I find this interesting since when you hear people talk about their investment advisors results, they are often bragging about how they beat the market. Maybe these are just the type of people I noted in my blog post on investment bravado.

If you were surveyed, would your three top selections be maintenance of your lifestyle, protection of your capital and growing your wealth (college funding is typically a higher priority in the U.S. than Canada, so I moved it arbitrarily down the list. But with the increased costs to attend University in Canada, it is likely a high priority for Canadians, but I am not as sure as high as for Americans)? If not, you may want to revisit the priorities you have for your advisor and yourself.

Book Giveaway


Thank you to everyone who has completed the financial/wealth survey linked to my previous blog posting. The response has been tremendous. I will announce the five winners the week of July 17th.

This site provides general information on various tax issues and other matters. The information is not intended to constitute professional advice and may not be appropriate for a specific individual or fact situation. It is written by the author solely in their personal capacity and cannot be attributed to the accounting firm with which they are affiliated. It is not intended to constitute professional advice, and neither the author nor the firm with which the author is associated shall accept any liability in respect of any reliance on the information contained herein. Readers should always consult with their professional advisors in respect of their particular situation.