The Best of The Blunt Bean Counter - A Family Vacation - A Memory Worth Not Dying For

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 May 8, 2012 blog that I already re-posted in 2015 on the merits of a grandparent/parent taking their family on a vacation if they have the financial means.

The impetus to post this blog yet again, was a retirement webinar for small business owners I took part in earlier this month. During the webinar I discussed this topic, which reinforced to me, how valuable these trips can be for family bonding (taking the optimistic viewpoint, as opposed to the possibility that too much togetherness may not be good for some families).

A Family Vacation- A Memory Worth Not Dying For

I have written several times on the topic of whether parents (parent can be interchanged with grandparent wherever used in this post), who have the financial means, should provide partial gifts while they are alive, as opposed to just leaving an inheritance to their children or grandchildren.

I am a proponent of providing partial gifts while alive if you have the financial resources. My rationale is simple. Why not receive the pleasure of your gift either directly (such as a family vacation) or vicariously (by observing your children or grandchildren enjoy their gift such as a bike, car or even cottage).

The concept of a partial gift being used at least in part for a family vacation has substantial appeal to many parents. A family vacation is appealing because a parent can participate in the experience, the vacation more often than not, results in memories that last a lifetime for all the participants, and lastly, the parent has control over the gift.

I can attest personally to the benefits of a family vacation. Several years ago, my in-laws funded a Disney Cruise vacation for their children, their children's spouses and their grandchildren. This trip had a profound impact on the bonding of the grandchildren. In the case of my in-laws, the memories and enhancement of their grandchildren’s relationships was priceless and continues to this day.

Another very poignant and moving example of the gift of travel is the story of Les Brooks. Les, a Vietnam veteran, had unresolved issues relating to the war and as he states in this Princess Cruises travel blog.

One day during the course of a conversation, Les’ mother asked him if he could take a trip anywhere in the world, where would he go. After thinking about the question he surprised his mother by saying Vietnam. Unbeknownst to Les, she later booked him on a cruise to Vietnam. 

Sadly, his mother passed away before Les took the cruise and could not observe the impact this gift had on her son’s life; but I would surmise, she knew the impact it would have as she paid for the cruise. Les says this about the special gift his mother provided while alive; “I realized my mother’s gift had opened the door to many profound gifts. Through her kindness and intuition, she provided the way back to Vietnam and my healing. There, through the smiling acceptance and unspoken forgiveness of that little girl and the many other Vietnamese who welcomed me, I was able to put aside much of the guilt that had gnawed at me for so long."

While Les’ gift was not a family bonding vacation, it was a gift provided while his mother was alive, a trip that may never have occurred if Les inherited the money and spent it otherwise.

The concept of using a partial gift to fund a family vacation has become popular for both family bonding and financial reasons. As grandparent David Campbell says in a USA Today article (link expired), he is mostly motivated by a desire to make his children's lives a little easier. "It's getting to a point I'd like them to enjoy life," says Campbell, a regional sales manager. "And if they're going to enjoy it, they might as well enjoy it with me."

I have observed the family vacation phenomenon on several of my own vacations. Suddenly a horde of people arrive at the pool or restaurant (not necessarily a welcome site for other vacationers) with corny matching t-shirts, saying “Smith Family Vacation 2011” or some other similar sentiment. 

Although we all know that any large family gathering can veer off the rails, these trips often bridge the generation gap between offspring and grandparents and parents. I often hear people reference these types of family vacations when they have a family get-together or the topic arises over dinner with non-family members.

Personally, I would rather hear my grandchildren say or know they are saying "When I was young, my grandparents took me on the most amazing trip!", than, “I just inherited $25,000 from my grandparents, what should I buy with it?”

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. Please note the blog post is time sensitive and subject to changes in legislation or law.

The Best of The Blunt Bean Counter - Are you Selfish with your Money and Advice?

This summer I am posting the "best of" The Blunt Bean Counter blog while I work on my golf game. Today, I go way back to July 2012, for a post on whether you are selfish with your money and advice.

Are you Selfish with your Money and Advice?

I think it is commonly accepted that most people do not like to discuss money matters. In fact, I have posted on several taboo money topics ranging from discussing the family will to intergenerational issues surrounding money. I find the fact that people are not willing to discuss money quite ludicrous in some cases and potentially harmful in certain other situations.

But, should this disinclination to discuss money extend to investment or cost saving opportunities where you may be able to financially assist family, friends and acquaintances? Are there situations in which you do not have to reveal personal financial details, such that one can disengage from the money taboo?

So, where am I going with this? Let me ask you the following questions:

1.  If you are a stock picker and have a new favourite stock, would you inform your family, friends and acquaintances about this stock?
2. What if you found a great cottage to rent this summer at a great price, but you can only use it two weeks of the summer, would you inform your family or friends of its availability?
3. What if someone came to you with a private investment which you thought was the next Facebook, would you offer this opportunity to your family, friends, acquaintances or clients?
4. What if you found a great real estate property you felt could be fixed-up cheaply and flipped quickly, but you would be stretched to purchase it yourself. Would you offer a piece of this property to your family or friends?
5. Finally, what if you have a client or contact who is a distributor for Armani suits for men and Christian Louboutin shoes for women and they offer you a standard 50% discount and allow you to bring a guest, would you bring a guest?

Personally, I would answer yes to all the above and not think much about doing such. To me, if I can make money and also help someone make money or save money, I am happy to share the wealth, so to speak. In fact, I have done all the above in some shape or form. This does not make me a good person, I have several other faults; but I am just not selfish where I can share the spoils of a good investment or opportunity. 

However, some people are not as forthcoming. The question is why?

I see a couple of potential reasons.

The first and most justifiable reason is that although many people are willing to take a personal financial risk on a stock pick or investment opportunity, they do not want to be held responsible if others lose their money. I think this is a very valid concern. The only counter argument I have for this concern is if you know your family and friends well, you probably know to which people you can say, "Here is the opportunity and here is the risk. You are a big boy or big girl, make your own decision, but I am partaking in this investment and if you follow suit, you do so with the same risk I have assumed".

I would suggest for the people in the subset above, most would probably inform family or friends about the cottage rental opportunity and Armani suits/ Christian Louboutin shoe sale, because in these cases, there is no risk of financial loss and blame, as you are just helping others save money.

This leads me to an alternative reason for not “sharing” investment opportunities or cost saving opportunities. Many months back I wrote a blog post called “How we look at money”. The post centered on a study by Dr. Brad Klontz a financial psychologist.

The study which deals with money through a concept of “money scripts” says money causes certain people to be “concerned with the association between self-worth and net-worth. These scripts can lock individuals into the competitive stance of acquiring more than those around them. Individuals who believe that money is status see a clear distinction between socio-economic classes.”

I would suggest it is this subset of people that do not involve or inform others of these investments and cost saving opportunities. Their actions are a result of their competitiveness in acquiring more than those around them, such that they feel more powerful with the exclusivity of being involved in these opportunities while excluding their family and friends.

These people feel that if their investments work out, they will have more money than their family,  friends and acquaintances and reinforce their financial superiority. In the case of the cottage they would not let others know about the deal they received, yet they would invite guests to the cottage to show it off. The same would go for the suits or shoes; they would rather show up in the Armani suit or Christian Louboutin shoes to reinforce their perceived power and status and would not want others to present the same image.

As I have stated on numerous occasions, I find the psychology of money intriguing. Think how you and the people you know would respond to the above five situations and whether these situations would provide a view into your/their financial psyches.

P.S.-- Just so none of my family and friends think they were the inspiration for this blog post, it is based on "Someone that I Used to Know" as music artist Goyte would say.

The blogs posted on The Blunt Bean Counter provide information of a general nature. These posts should not be considered specific advice; as each reader's personal financial situation is unique and fact specific. Please contact a professional advisor prior to implementing or acting upon any of the information contained in one of the blogs.

The Taboo Of Money - I Will Not Talk About It- Part 3

As discussed in my blog post last week, I suggest you consider a frank discussion with your beneficiaries about your will. Today I conclude that discussion with the final four reasons you may wish to consider holding a family meeting.

The Benefits of Having a Family Meeting

The following are the final four benefits of having a family meeting about your will.

5. Giving the Kids what They Really Want

We all have a tendency to assume we think we know what assets our children want. In many cases we are correct, however, in others we are way off base. A family meeting allows you to discuss individual assets to ensure the assets are given to the child who really appreciates and wants the asset. That is not to say that whatever a child wants they will get. In some circumstances more than one child may want the same asset and if you intend to equalize your will equally, the equal proportion may be distorted by allocating assets according to your children’s likes and dislikes.

The determination of the wants of family members will often revolve around larger assets such as cottages.  Some children may have an attachment to the family cottage while others may not; or maybe you are not sure whether any child would want to take over the property when you pass. A meeting provides the opportunity to raise the issue for your children to decide amongst themselves if they will want to sell the property, share the use, or have one child inherit the property. Sometimes the meeting may bring you to the realization that the issues surrounding the second property are so divisive that the prudent decision would be to sell the property.

Don't forget to sweat the small stuff! I have spoken to many corporate executors from the big banks over the years, and they often comment that family disagreements are as likely to occur over personal and sentimental items as they are over large assets such as cottages or even money.

Many wills do not properly address personal and sentimental assets. The reason for this is typically twofold:

1. The parents assume naively that the children can deal with these assets, especially where there is little real value to them.

2. Where personal assets such as art and jewellery have significant value, the parents do not wish to pay income tax on the disposition of these assets or, have no idea of the tax consequences of disposing of these assets. Consequently the assets are ignored in the will. This creates future problems as the executor is required to report the value of these assets for both probate and income tax purposes and may face penalties if he/she does not report the assets and pay the taxes.

It is thus important for you to discuss these items at the family meeting or at a separate informal meeting. Where there is no clear agreement over who should get a personal asset, you can have the beneficiaries’ rank the assets one to ten and the assets are then allocated to the beneficiary with the highest ranking. Alternatively, you can undertake a lottery and the assets will be distributed in your will according to the lottery results.

The key is that you should address these personal items, as if you leave them unaccounted for in your will, the possibility that they could become contentious is very large.

6. Succession Plans for the Family Business - Keeping it Going

Where there is a family business, the succession of that business is one of the most important issues facing the family. The value of their estate and hence the value of the assets in the will are directly correlated to the value or succession of their business.

In my opinion, the succession planning decision is so large in importance with the potential to be so divisive that it should not be part of any family meeting discussing your will. For family succession issues, is it often best to bring in outside specialists to work with the family.

However, if all the children will be given equal shares in the business, the topic can be brought up as part of the family meeting. If you have already made it known to your children that you had decided to leave the business to one child or only some of your children who work in the business and that you plan to equalize the other children with cash or other assets, the topic should be broached.

However, parents must understand that the value of the business can fluctuate wildly over the years, with the result being that the child(ren) who inherit(s) the shares may in essence have inherited a significantly larger asset than the other child(ren). Alternatively, the shares of the company may prove to be worth substantially less than the assets distributed to the other child(ren) if business conditions cause the value of the business to diminish. The parent will have no control after their death on the potential disparities in value. I have seen situations where asset distributions were equal at the time of death, but the inherited business grew astronomically and the children who did not inherit the company shares felt wronged by their parents. Consequently, this topic needs to be discussed and explained at the meeting. You need to make it absolutely clear to your children that the company value could go up or down and that they must understand these valuations are beyond your control and that is one of the uncertainties of your will and an issue that may continue on beyond your death.

­7. Helping your Kids plan their Future

It is also a kindness to your beneficiaries to let them know, generally, what they can expect as an inheritance. Even if it is not your intention to gift money or assets over to them while you are alive, at least they can get a sense of what their financial position will be so they can arrange for their own lifestyle and retirement planning. If you are aware that your child is expecting a large inheritance, and you are planning to leave most of it to charity, it is only fair to let him know so that he/she does not overextend himself financially on the assumption that he will someday be wealthy. On the other hand, if your child is living very frugally in order to save for a retirement, and you know that you will be leaving her enough that she will be well off in retirement regardless of her savings, it is fair to her to let her know so she can "live it up" a little! This is a very contentious issue that I wrote about previously in this blog post.

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8. Children's Roles in Administering the Estate

A side benefit of a family meeting is that you can broach the topic of your executors. Assuming you wish one or more of your children to be your executor(s), you can use the meeting to discuss the responsibilities and the burden of being named an executor of the will. You can explain the duties of the executor and determine if the child you wish to be an executor is willing to undertake the position. If he/she is not, you will then have to consider whether you hire a corporate executor or name family friends or business associates.

You could also take advantage of the opportunity to discuss whether you wish a family member to be your power of attorney of your assets if you become incapable of managing your affairs, and whether you wish to appoint a child to be responsible for your medical affairs or living will, should you also become incapable of making medical care decisions.

A meeting provides our children with some clarity towards their inheritance. Obviously the clarity is still somewhat murky, as there are several variables such as life expectancy, health, re-marriage, changes in wishes etc. However, it still provides some direction for your children’s own financial planning. If you intend to provide partial inheritances while alive, this is very important information for the children to be aware of, if these partial inheritances are significant.

This concludes this mini-series (excerpts from my abandoned book). I hope it provided some food for thought.

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.

The Taboo Of Money- I Will Not Talk About It- Part 2

As discussed in my blog post last week, I am going to post small excerpts of a book I was writing on money taboos which I have abandoned. Last week I suggested you consider a frank discussion with your beneficiaries about your will. Today I discuss four of the eight benefits I see in having a family meeting to discuss your will; I discuss the final four benefits in next weeks blog post.

The Benefits of Having a Family Meeting

The following is a brief summary of what I believe to be the main benefits of having a family meeting about your will:

1. Avoiding Future Conflict - and Litigation!

Fans of Charles Dickens' Bleak House will of course remember the fictional case of Jarndyce and Jarndyce in which generations of family members fought over a large estate until the estate was completely consumed by legal fees. If you don't discuss your will with your children, any perceived actual or perceived inequalities in your will cannot be explained rationally to them, and conflict and estate litigation might well result. Of course, the kids might "lawyer up" despite your best efforts, but at least you have done your best to avoid it!

One of the key reasons for even considering a family meeting to discuss your will is the opportunity it provides for you to outline in a rational manner and hopefully in a calm setting why you have left certain assets to certain children, to charity or to whomever else you have decided to leave assets. It is a bit of a guessing game whether you will have properly perceived what your children perceive as inequalities; but in most cases, it will be obvious.

2. Explaining Intentional Inequities

An example of an obvious and deliberate inequity is where you have left more money to one child than to the others. Where you have left more money to one child (perhaps he or she makes less money than the other children), you can use the meeting to explain why and explain that it has nothing to do with loving that child more, you are just helping him since they have not been as fortunate as the other siblings.

The fallout on this decision may come from two sources. Most of us are familiar with the biblical parable of the prodigal son, in which the first son asks for his inheritance from his father early, blows through all the cash and then goes back to his dad for more. Rather than telling his son to suck it up and support himself, the dad then dishes out even more to the prodigal son, leaving his hardworking younger son angry. Remember that there may be reasons why the children are not equally successful - perhaps the least successful one is also the laziest and most unmotivated of the children. The others may question why they are being penalized in your will for their sibling's lack of performance. It is your right to give your money to whomever you wish, of course, but you should expect at least some resentment from the other siblings should you wish to proceed with this course. Be prepared to justify your decision.

Secondly, and more surprisingly, fallout may not come from the children who are not receiving equal inheritances, but from the child receiving the additional money. They may feel insulted that you feel they have been less successful, and embarrassed by your desire to give them extra help, rather than regarding the extra allocation as compassionate recognition that they require some additional financial assistance.

3. Avoiding Unintentional Inequities

There may be less obvious inequities. There may be consequences arising from your legacies that you did not anticipate, creating unintended conflicts between your family members. For example, in striving to be fair, you may bequeath a cottage or other secondary property to all your children equally, without realizing that doing so actually creates a burden on those of them who do not want the cottage but will be required to pay for its upkeep. You may also miss the opportunity to consider other ways of disposing of your assets, perhaps by intervivos gifts that will ultimately minimize taxes.

4. Clarification of Prior Gifts and Loans

Many of my clients have wanted to help out their kids during their lifetimes by providing them with a little (or a lot) of extra cash. The money might be used for a down-payment on a property, for education or to bail out a child who hits a bad financial spot. The most important thing is that the child must know whether the money was a gift or a loan and whether that money was expected to be an "advance" on the inheritance. How to intend to characterize these gifts or loans is an important issue to discuss in the family meeting, especially where you want to avoid an unintentional inequity if you were to die without making your intentions down and where one child has already received a significant portion of your estate.

The above issue can often be dealt with by utilizing a “hotchpot clause” in your will. Over the years, a legal concept now commonly known as a “hotchpot clause” has evolved to deal with the equalization of the beneficiaries of an estate, where one or more of the beneficiaries have already received money during their parent’s lifetime. When a hotchpot clause is inserted in a will, the clause will prevent a beneficiary (typically a son or daughter) from “double dipping” where the parent intended any money advanced during their lifetime to be considered a pre-payment of an inheritance, rather than an advance over and above an intended inheritance. See this post I had on the hotchpot topic for more information.

Next week I conclude this series with the final four reasons to consider a family meeting.

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.

The Taboo Of Money - I Will Not Talk About It -Part 1

As discussed in my blog post last week, I am going to post small excerpts of a book I was writing on money taboos which I have abandoned. Today and next week, I write on the taboo of discussing your will with your children, either individually or in a family meeting, while you are alive.

The Taboo

One of the biggest money taboos people have is discussing their will openly with family members.

People hate talking about their own death. People hate talking about their own money. People hate conflict within their families. Combine all of these hang-ups and a perfect storm of neurosis results, creating a virtual tsunami of taboos involving openly discussing one's wealth, one's death and disclosing one's personal opinion about family members. Many people view the thought of this discussion with horror, but my advice is simply - "get over it and do it!"

Reasons for the Taboo

In a 2016 Google Consumer Survey conducted by Legalwills.ca, the survey found 62% of Canadians do not have wills. The survey also noted that 12% of Canadians have an outdated Will (most never updated their Wills once they married and/or had children), which means that 74% of Canadians do not have an up-to-date Last Will and Testament.

I suppose the most common, although rarely admitted, reason for this is, that people are in denial that their lives will eventually end and that their lives will probably end at a time that they cannot control. Understandable, but foolish. None of us get out of this world alive, so get a move on and arrange your affairs so that all of the money, jewelry, collectibles and personal items you have worked for will ultimately be distributed in the most beneficial and tax-efficient way possible.

Once someone has faced up to the necessity of drafting the will, why then the fear of discussing its contents with family members - those who are actually going to benefit from the will? I have heard both rational and irrational reasons for avoiding the discussion. Here's a sampling of some reasons/excuses I have heard over the years for people not discussing their wills/estate planning with their beneficiaries:

1. It is none of their business.
2. My parents did not discuss their will with me, so why should I discuss it with my children.
3. It is bad luck.
4. If my children know what is in my will, they will be hovering over me like the Angel of death waiting for me to kick the bucket.
5. Discussing our intentions will just cause tensions amongst my children.
6. My will does not split my wealth equally among my children.
7. My children are not equally responsible and I have a trust for one child; I don’t want them upset at me while I am alive that I don’t trust their judgement.
8. I am leaving a substantial sum to charity, my kids will “freak” when they find out.
9. I have no idea how long I will live, my assets may be depleted by the time I pass away and the kids will be expecting certain assets that may not be in existence.
10. I have not drafted a will (see above).

Consequences of adhering to the Taboo

If you do not discuss your will with your children while alive, the following are possible

consequences:

1. Perceived or actual inequalities in your will that can be explained rationally while you are alive will never be explained. 
2. You may create unintended conflict amongst your children.
3. You may not have an accurate understanding of which assets your children truly want.
4. Income taxes may not be minimized.
5. Estate litigation may result.

There is no doubt that money brings out the worst in some people and a full disclosure of your family assets and planned distribution may cause problems in your relationship with your children and in their relationships with each other. But it is my belief that it is better to know the problems, confront the problems and solve the problems before you die and this can only be done by a full and frank discussion with your beneficiaries.

Next week I will discuss the benefits of having a family meeting to discuss your will and estate planning.

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.

Breaking The Money Taboo – It Makes Cents

In 1913, Sigmund Freud recognized the taboo of money when he wrote, “money questions will be treated by cultured people in the same manner as sexual matters, with the same inconsistency, prudishness and hypocrisy.”

One hundred years later, sex is often openly discussed, yet many money matters are still considered taboo. As consequence many people make bad financial and personal monetary decisions because they avoid the topic. This lack of communication can impact anything from your estate planning, to your marriage, to the selection of your executor, to even losing friends over how to split a restaurant bill.

In my opinion, the money taboo is out-dated and potentially detrimental from both a familial and financial perspective and needs to be broken.

The Free Dictionary defines a taboo “as a ban or inhibition resulting from social custom or emotional aversion”. I think that is a simple and elegant definition. Whether the taboo’s origin is Victorian, French, or biblical in nature, our parents and their parents have propagated the notion that it is bad social etiquette to discuss money matters of any kind.

Every culture and every family have different money taboos. For example, North Americans dislike revealing how much money they earn. It is taboo. Norwegians, on the other hand, have the tax records of all citizens available as public record and have no expectations of privacy.

I have observed first-hand, the financial cost to clients, friends and family and the related personal cost in regard to marriages, sibling and personal relationships where people did not have open frank discussions about money. This issue caught my attention to such a degree that in 2013 I decided to write a book on the topic, encouraging people to confront and/or consider various money taboos.

As they say, the best-laid plans of mice and men often go awry and unfortunately two years later, due to time and work constraints and the realization that many of my proposed topics had psychological bents I was not qualified to discuss, I had only finished two (way too long) chapters of my proposed 17 chapters. I thus decided to set aside the book on money taboos and wrote Let’s Get Blunt About Your Financial Affairs (which was a collection of my best blog posts and thus required more editing than writing). Check - bucket list item taken care of.

As I expect to go in a different direction should I ever write another book, I figured I may as well get some use of the time I spent on my proposed book, so I have decided to post excerpts of the two chapters I wrote (the first chapter over the next couple weeks, the second likely in September). These two chapters are:

1. I Will Not Talk About It – this chapter revolves around our reluctance to discuss our will with our family

2. Asking For Money: The Intergenerational Communication Gap – this chapter discusses situations where children need money (example to escape abusive relationship or start a new career) and situations where parents need money (example: need to reverse mortgage their home since they have no money left and have medical bills or just daily expenses they can no longer afford to cover).

In these posts I am going to discuss reasons people have given me for continuing specific money taboos and review the consequences they face by adhering to these off limit discussions. I attempt to explain why we should consider challenging these prohibitions and how to break some of these taboos.

Hopefully by the time I conclude this “mini-series”, you may understand why I think Canadians need to talk about money.

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.

The Best of The Blunt Bean Counter- Inheriting Money - Are you a Loving Child, a Waiter or a Hoverer

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 June, 2014 blog post on how people act when they become aware they will inherit money from their parents or grandparents.

This topic is a bit controversial and the post became the basis for an article by Adam Mayers of the Toronto Star on inheritances, titled Inheritances are about love, money and greed.

Inheriting Money - Are you a Loving Child, a Waiter or a Hoverer

In February 2012, I wrote a blog post titled “Is it Morbid or Realistic to Plan for an Inheritance?”. I knew this was a touchy subject and would elicit various reactions from my readers. In the post, I stated that to “ignore the existence of a significant future inheritance that would impact your personal financial situation may be nonsensical” from a financial and retirement planning perspective.

Whether you believe you should plan for an inheritance or not, is your own personal decision. Today I want to deal with the behaviors and actions of those who stand to inherit money from their parents. Over the last 25 years, I have dealt with the tax, financial and psychological issues surrounding numerous client estates. I have observed the actions of those who will be the recipients of an inheritance and have found their behavior anywhere from fascinating to sickening.

I have found people who will inherit money fall into 4 groups:

1. The Loving Child

2. The Pragmatic Loving Child

3. The Waiters

4. The Hoverers

The Loving Child

For this group, their parents come first and money is secondary. Typically, these children are very close to their parents throughout their life and call and see them on a consistent basis, often weekly, or even daily. They have always helped their parents with their medical needs or in some cases with their financial needs, without giving it a second thought; because, their parents are well, their parents. This group would tell you they would give back any inheritance, if it allowed them another day to be with their parents and would consider it blasphemy to plan for an inheritance.

The Pragmatic Loving Child

This group is a subset of #1. These children love their parents and just want their parents to enjoy their lives, even if it means that they spend the children's inheritance. Children in this group may consider the reality that they will likely receive an inheritance. Even so, they do not want to take it into account in their planning and it is only at the insistence of an accountant or financial planner that they would even consider such.

The Waiters

I am not sure who coined this term, but I have seen it used many times. Waiters are described as children waiting for their parents to die, so that they can benefit from their parents assets. Waiters are considered to have a warped sense of entitlement to their parent’s money. I have observed several waiters over the years, some who went into debt to live a lifestyle based on an assumed inheritance. In my limited sample size, the children have always received their inheritance. However, one day I would love to see the face of a waiter when a lawyer informs them their parent decided to leave everything to charity instead of them.

The Hoverers

Hoverers are an even lower species than the waiters. These children often pay little or no attention to their parents their whole life, but when their parents get sick or older, they start hovering around. Many years ago one of my clients was very sick and was expected to pass away any day. I received a call from one of his children. I assumed the call was going to be the bad news that my client had passed away and the child was going to provide me the details of the funeral. The call was indeed to tell me their parent had passed away, but they were not calling to tell me about the funeral arrangements; their question to me was when they could start accessing their inheritance. I just felt sick to my stomach.

Don’t ask me why I decided to write about this topic. I guess as I have stated many times in my blog, I am just fascinated by how money affects people’s behavior. Thankfully, most people fall into the first two groups. If you are a Waiter or Hoverer, consider taking a good look at yourself in the mirror.

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.

The Best of The Blunt Bean Counter - A Family Vacation- A Memory Worth Not Dying For

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 May 8, 2012 post on the merits of a grandparent/parent taking their family on a vacation if they have the financial means.

A Family Vacation- A Memory Worth Not Dying For

I have written several times on the topic of whether parents, who have the financial means, should provide partial gifts while they are alive, as opposed to just leaving an inheritance to their children or grandchildren.

I am a proponent of providing partial gifts while alive if you have the financial resources. My rationale is simple. Why not receive the pleasure of your gift either directly (such as a family vacation) or vicariously (by observing your children or grandchildren enjoy their gift such as a bike, car or even cottage).

The concept of a partial gift being used at least in part for a family vacation has substantial appeal to many parents. A family vacation is appealing because a parent can participate in the experience, the vacation more often than not, results in memories that last a lifetime for all the participants, and lastly, the parent has control over the gift.

I can attest personally to the benefits of a family vacation. Several years ago, my in-laws funded a Disney Cruise vacation for their children, their children's spouses and their grandchildren. This trip had a profound impact on the bonding of the grandchildren. In the case of my in-laws, the memories and enhancement of their grandchildren’s relationships was priceless and continues to this day.

Another very poignant and moving example of the gift of travel is the story of Les Brooks. Les, a Vietnam veteran, had unresolved issues relating to the war and as he states in a Princess Cruises travel blog (unfortunately the link has expired)  “Vietnam was a place I left in 1966 praying I would never have to go back. But Christle sensed the deeper truth…I was curious about the place; I wanted and needed to see for myself what life was like today for the people of a country that I left so torn apart by war.”.

One day during the course of a conversation, Les’ mother asked him if he could take a trip anywhere in the world, where would he go. After thinking about the question he surprised his mother by saying Vietnam. Unbeknownst to Les, she later booked him on a cruise to Vietnam. 

Sadly, his mother passed away before Les took the cruise and could not observe the impact this gift had on her son’s life; but I would surmise, she knew the impact it would have as she paid for the cruise. Les says this about the special gift his mother provided while alive; “I realize my mother’s gift had opened the door to many profound gifts. Through her kindness and intuition, she provided the way back to Vietnam and my healing. There, through the smiling acceptance and unspoken forgiveness of that little girl and the many other Vietnamese who welcomed me, I was able to put aside much of the guilt that had gnawed at me for so long."


While Les’ gift was not a family bonding vacation, it was a gift provided while his mother was alive, a trip that may never have occurred if Les inherited the money and spent it otherwise.

The concept of using a partial gift to fund a family vacation has become popular for both family bonding and financial reasons as discussed in this USA Today article . As grandparent David Campbell says in the article, he is mostly motivated by a desire to make his children's lives a little easier. "It's getting to a point I'd like them to enjoy life," says Campbell, a regional sales manager. "And if they're going to enjoy it, they might as well enjoy it with me."

I have observed the family vacation phenomenon on several of my own vacations. Suddenly a horde of people arrive at the pool or restaurant (not necessarily a welcome site for other vacationers) with corny matching t-shirts, saying “Smith Family Vacation 2011” or some other similar sentiment. 

Although we all know that any large family gathering can veer off the rails, these trips often bridge the generation gap between offspring and grandparents and parents. I often hear people reference these types of family vacations when they have a family get-together or the topic arises over dinner with non-family members.

Personally, I would rather hear my grandchildren say or know they are saying "When I was young, my grandparents took me on the most amazing trip!", than, “I just inherited $25,000 from my grandparents, what should I buy with it?”

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.

How Much Money Does it Take to Make You Happy?

Have you ever wondered if money brings you happiness? You are not alone in this thought. I find this topic fascinating and as such, I have written several blog posts on the relationship between money and happiness/success, including:

• Does Money Bring Happiness
• How We Look at Money
• Are Money and Success the Same Thing?

Last summer I was teamed up with a high-end money manager at a golf tournament. During the round my interest was piqued when he provided me with his thoughts and observations on wealth as it related to happiness and unhappiness.

His general observation was that “Money makes happy people happier and unhappy people even unhappier” (keep in mind, he deals with the wealthiest segment of the population).

It was his contention that people who are happy to start with, have the ability to receive pleasure through spending, sharing and giving. Happy people enjoy the material things they can purchase. They also can be generous to others and receive satisfaction seeing the benefits of their generosity. Overall, they receive pleasure observing the betterment of themselves, family, friends and the community.

Conversely, he opined that unhappy people, considered money to bring added stress and a burden that manifests itself into further unhappiness. He felt the cause of this unhappiness resulted from the worry that people judged them and there was often paranoia that people wanted access to their money. For the most part, he had observed that these people don’t get real pleasure from their money and don’t enjoy spending, giving and sharing.

While I appreciated his insights, I was concerned about the applicability of his findings given the wealth of the people in his sample and his limited sample size. This caused me to look for studies with more of a representation of the average population to determine if “happy people” were able to reach a certain level of happiness due to their financial success. This led me to a 2010 Princeton University Woodrow Wilson School study by Angus Deaton and Daniel Kahnemen.

Princeton Study

Deaton and Kahnemen analyzed the responses of more than 450,000 Americans to the Gallup-Healthways Well-Being Index. They found that “emotional well-being” (essentially your day to day contentment based on the frequency and intensity of experiences of joy, stress, sadness, anger, and affection that make one’s life pleasant or unpleasant) and “life evaluation” (the thoughts that people have when they think about their life) are not necessarily correlated.

The authors found emotional well-being increases with income, but does not progress past $75,000 (or $90,000 Cdn :). However, more money boosts how you assess your life. As Mr. Deaton told Randolph Schmid of the Associated Press "Giving people more income beyond 75K is not going to do much for their daily mood ... but it is going to make them feel they have a better life."

Personally I wonder how all this translates regionally. Am I as happy with $75k if I live in Flin Flon as I am with $75,000 in Toronto? How about if all my friends make $300,000,does my life evaluation become so negative it impacts my happiness?

Anyways, if you believe in the findings of the Princeton study, the money manager’s view is essentially corroborated and at $75k, you’re bopping around the house singing “Happy” just like Pharrell Williams.

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.

The Best of The Blunt Bean Counter - Are Money and Success the Same Thing?

This summer I am posting the "best of" The Blunt Bean Counter while I work on my golf game. The work is actually beginning to pay off. While playing the Hoot at Osprey Valley (the 3 courses at Osprey are typically listed in the top 100 Canadian courses), I missed two makeable putts on 16 & 17 or I would have broken 80.

Today, I am re-posting a two-part blog on "Are Money and Success the Same Thing?" This post was described by The Big Cajun Man (blogger behind Canadian Personal Finance blog) as a very Zen post. I figured Zen was good for reading while sitting on your cottage dock with a glass of wine.

Are Money and Success the Same Thing?

Moneyville runs a weekly feature called Fame and Fortune, where famous people discuss various financial lessons they have learned and provide financial advice. The last question is always “Are money and success the same thing?” In the columns I have read, I do not ever recall a featured guest answering yes to this question. Yet, the fact that the question is asked insinuates that some people feel the answer is yes. I would further suggest, that we all have met people who we think would answer yes to this question; or should answer yes, based on their actions.

In my opinion, the brevity of the Moneyville column forces a cliché answer from most of the guests. The guests typically say things such as “money is fleeting” or “money does not buy love” or “people should not be defined by their money”. However, this simple question is actually very complex when you peel back the layers. Success can be defined and interpreted in so many ways. I believe that money and success are not one and the same, but are so closely intertwined in some circumstances, that money may allow you to buy certain variations of success, while in other situations it can derail success.

Today, I will not get into how we look at money, a topic I discussed in a July 2011 blog post, but will focus solely on the success side of the question.

What is Success?

The definition of success is elusive. If you ask 100 people, you would probably get 100 different answers as to how they define success. So I turn to some famous and less famous people and their definitions and interpretations of success (and money) are as follows.

Ralph Waldo Emerson, a famous American essayist and poet, wrote this poem about success (although there is some debate if he indeed wrote this poem):

"What is success?
To laugh often and much;
To win the respect of intelligent people
and the affection of children;
To earn the appreciation of honest critics
and endure the betrayal of false friends;
To appreciate the beauty;
To find the best in others;
To leave the world a bit better, whether by
a healthy child, a garden patch
Or a redeemed social condition;
To know even one life has breathed
easier because you have lived;
This is to have succeeded."

John Wooden, considered by many as the greatest basketball coach ever, had this definition, “Success is peace of mind, which is a direct result of self-satisfaction in knowing you made the effort to do your best to become the best that you are capable of becoming."

According to John Maxwell, an evangelical Christian author, success is when “Those who know you the best love you the most.”

A less spiritual interpretation of money and success is provided by American author and motivational speaker Wayne Dyer who states, “Successful people make money. It's not that people who make money become successful, but that successful people attract money. They bring success to what they do.”

Finally, and I am not sure who said this, but another more financial oriented definition of success is “The world defines success in terms of achieving one's goal, acquiring wealth, status, prestige and power.”

I have been told by other bloggers that the average reader only pays attention for 400 words (I assume my readers are not average, since I breach the 400 word limit regularly) and since I am already over 600 words, I will stop here. However, tonight, when you are relaxing in your La-Z-Boy recliner (ignore the screaming kids and barking dog), contemplate how you would answer the question of whether money and success are one and the same? I will conclude my thoughts tomorrow.

Here is the link to the second part of this series, should you wish to read more on this Zen topic.

The blogs posted on The Blunt Bean Counter provide information of a general nature. These posts should not be considered specific advice; as each reader's personal financial situation is unique and fact specific. Please contact a professional advisor prior to implementing or acting upon any of the information contained in one of the blogs.

Inheriting Money - Are you a Loving Child, a Waiter or a Hoverer

In February 2012, I wrote a blog post titled “Is it Morbid or Realistic to Plan for an Inheritance?”. I knew this was a touchy subject and would elicit various reactions from my readers. In the post, I stated that to “ignore the existence of a significant future inheritance that would impact your personal financial situation may be nonsensical” from a financial and retirement planning perspective.

Whether you believe you should plan for an inheritance or not, is your own personal decision. Today I want to deal with the behaviors and actions of those who stand to inherit money from their parents. Over the last 25 years, I have dealt with the tax, financial and psychological issues surrounding numerous client estates. I have observed the actions of those who will be the recipients of an inheritance and have found their behavior anywhere from fascinating to sickening.

I have found people who will inherit money fall into 4 groups:

1. The Loving Child

2. The Pragmatic Loving Child

3. The Waiters

4. The Hoverers

The Loving Child

For this group, their parents come first and money is secondary. Typically, these children are very close to their parents throughout their life and call and see them on a consistent basis, often weekly, or even daily. They have always helped their parents with their medical needs or in some cases with their financial needs, without giving it a second thought; because, their parents are well, their parents. This group would tell you they would give back any inheritance, if it allowed them another day to be with their parents and would consider it blasphemy to plan for an inheritance.

The Pragmatic Loving Child

This group is a subset of #1. These children love their parents and just want their parents to enjoy their lives, even if it means that they spend the children's inheritance. Children in this group may consider the reality that they will likely receive an inheritance. Even so, they do not want to take it into account in their planning and it is only at the insistence of an accountant or financial planner that they would even consider such.

The Waiters

I am not sure who coined this term, but I have seen it used many times. Waiters are described as children waiting for their parents to die, so that they can benefit from their parents assets. Waiters are considered to have a warped sense of entitlement to their parent’s money. I have observed several waiters over the years, some who went into debt to live a lifestyle based on an assumed inheritance. In my limited sample size, the children have always received their inheritance. However, one day I would love to see the face of a waiter when a lawyer informs them their parent decided to leave everything to charity instead of them.

The Hoverers

Hoverers are an even lower species than the waiters. These children often pay little or no attention to their parents their whole life, but when their parents get sick or older, they start hovering around. Several years ago one of my clients was very sick and was expected to pass away any day. I received a call from one of his children. I assumed the call was going to be the bad news that my client had passed away and the child was going to provide me the details of the funeral. The call was indeed to tell me their parent had passed away, but they were not calling to tell me about the funeral arrangements; their question to me was when they could start accessing their inheritance. I just felt sick to my stomach.

Don’t ask me why I decided to write about this topic. I guess as I have stated many times in my blog, I am just fascinated by how money affects people’s behavior. Thankfully, most people fall into the first two groups. If you are a Waiter or Hoverer, consider taking a good look at yourself in the mirror.

The blogs posted on The Blunt Bean Counter provide information of a general nature. These posts should not be considered specific advice; as each reader's personal financial situation is unique and fact specific. Please contact a professional advisor prior to implementing or acting upon any of the information contained in one of the blogs.