Kallista Chayil is our speaker today and her topic is "The Psychology of Estate Planning".

75% of estate plans fail.  What we give as an inheritance should be a blessing, not a burden.  People who inherit large sums may be unprepared to manage it responsibly either financially or psychologically.

 

Causes of Failure:

60% fail due to poor communication and mistrust.  Parents fail to disclose details to all of their children, leading to unpleasant surprises.  There may also be unresolved family conflicts (sibling mistrusts).

25% fail because the parents didn't prepare their heirs by communication and education of values and plans.

10% fail due to lack of a family vision statement that clearly communicates their sense of values and goals.

5% fail due to poor tactical money management.  The heirs may make inferior investments of have no advisors or incompetent advisors.  The heirs may not know how to manage the money.

 

 

Kallista told us that 75-95% of Canadians are financially illiterate and we have an inadequate relationship to money.  Money problems are the #1 stress and the most common conflict in marriages.  In many households, 40% of the income is spent servicing debt.  75% of households have less than $50,000 in investable assets.  When credit cards are used, spending increases 23%.

Money problems are symptomatic of bigger problems such as over spending, under spending (hoarding) and frivolous purchases.  75-95% of us have an inadequate relationship to money (eg) carrying bad debt, inadequate emergency funds, inappropriate investments, using money to dominate others, addiction to wealth (misers).  It is important to educate children about money and finances.

 

"For every complex problem, there is a solution that is simple, elegant and wrong"  H.L. Mecken.

 

Estate Problems:

Too much emphasis on financials and too high a level of control while withholding information about values. 

When adults act like adults, everyone wins.  Share responsibility for the plan with family.  Have joint decision making and open discussion when making the plan.

 

Three Important Things:

Unpack the issues.

Communicate about managing money (beginning with young children).

Collaborate to reflect family values and the values of the heirs.

Kallista's contact information:

 

Kallista Chayil Can be reached via 
 
phone 647-863-9332
Website Kallista.ca