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The Trust Economy: David Etheredge
From stints at Walt Disney Interactive and Microprose software to the Director of International Business Development at Hasbro and as minority partner in renewable energy company, Wind Works, David Etheredge brings an eclectic mix of passion for theatre, technology know-how, and business acumen to his current venture, SavvyCard. Through SavvyCard, David leverages the growth of mobile devices to build the “trust economy”.
“Wealth by Design: Kevin Talma
Kevin grew up in Barbados in the sixties and seventies when there was unprecedented change happening to the environment which affected him profoundly and he always wondered why development had to destroy the
nature he loved. These observations and interest in art and environment led him to the field of landscape architecture. Kevin has been practicing landscape architecture since 1988 apprenticing in California, Hawaii, Italy and Barbados before establishing Talma Mill Studios in 1990. Kevin’s passions include art, the environment, water sports, percussion music, travel and family all of which inform his practice of landscape architecture. Kevin holds a Master of Landscape Architecture.
At a farm convention in Chicago, I was approached by an audience member who explained that gifting a working farm to her children was preferable to selling and leaving them each $5 million. When I pressed her for more details – such as – “what do your children think of your plan?” She snapped her head back and proclaimed, “why would I tell them?”
I have to confess it wasn’t the first time that I had heard someone say that silence was going to be the key ingredient of their estate plan. It got me thinking how many beneficiaries – children especially — truly know the contents of their parent’s wills?
When I put the question to my audiences, “how many people hold a copy of their parents’ wills?” Only 10% on average acknowledge they do. The more interesting question is: “how many in the audience will play a lead or significant role in providing care for an aging parent?” The response — an average of 75% — agreed they would. I find the disparity between these two pieces of data, striking.
The relationship between inheriting money and the provision of health care is an issue moving into the media and cultural spotlight for two major reasons – we’re living longer (a lot longer) and the cost of health care and assisted living are rising faster than inflation and saving rates.
For some who live much longer than the average age of 76 for men and 81 for woman, many will turn to family for financial support and care when their savings are fully depleted – the same family from whom secrets were kept when a surplus seemed assured.
Why do so many people keep secrets from those who will likely be providing them with late in life care? How do secrets serve beneficiaries or add to relationships before we become old and dependant? Talk to enough estate planning professionals and they’ll tell you it almost always comes down to a lack of trust and a debilitating fear of death.
For those who view their money as an absolute source of power and control you can see how the aging process and the concomitant relinquishing of power and control makes dying and death such a wretched, fearful experience. Compare that to individuals who seriously prepare family, friends and charitable organizations to receive not just their wealth but their wisdom and you’ll find some extraordinary relationships built purposefully over a lifetime – even when years outstrip savings.
Sharing the contents of a will requires judgment – some might call it wisdom nurtured over time. A wisdom both taught and harvested through conversations with intended beneficiaries not in the last year of life, when death seems imminent, but precisely the opposite, when death is a distant abstraction.
A will doesn’t need to be seen as a solo “end of life document” but rather a collaborative work of art monumentally improved by living in relationship with our intended beneficiaries.
It is the act of collaboration, supported through frequent and deliberate conversation about the future that we leave something more valuable than just our money. This is, in part, how our fear of death recedes when we know with confidence that our beneficiaries—our emissaries — will take our ideas and perhaps our surplus assets at death and live purposeful lives themselves.
Have you shared the contents of your will with your intended beneficiaries – the ones likely to be providing late in life care for you?
Money won’t buy you happiness but it will get you the yacht that will allow you to pull up alongside of it and say “hello.” – David Lee Roth
Self-made billionaires caught my attention at a very early age. One of the first to do so was Greek shipping tycoon Aristotle Onassis (b. 1906 – 1975) who achieved global notoriety by marrying John F. Kennedy’s widow Jacqueline in 1968. (She finally agreed to the marriage after being pursued by Aristotle for years. By most accounts, her primary reason for accepting his proposal was financial security for her and her family. For Ari, she was probably the ultimate trophy wife. )
Onassis started his career with little more than ambition but eventually became part of a Greek shipping empire through marriage in 1946 to Athina the daughter of shipping magnate Stavros Livanos. By then he had already built up his own fleet of freighters and tankers. The marriage also made Ari the brother-in-law of a third Greek shipping tycoon, Stavros Niarchos, who was married to Athina’s sister.
For several decades the two brothers-in-law dominated the oil tanker business along with American billionaire Daniel K Ludwig. The rivalry between the men throughout the 1950s and 60s was intense with all three engaging in a “supertanker race” aimed at building the largest ships for their respective fleets. However, no matter how much money and power Ari accumulated, it was never enough to assuage a deep-seated insecurity. Deep down inside, he felt himself to be an outsider shunned by polite society and looked down upon by the significantly better looking and more suave Stavros.
Ari craved acceptance and respect. In early 1952 he thought that he had found a way to win both. He did so by purchasing Monaco which was Europe’s traditional playground for those possessing wealth or nobility, or both. Americans who had never heard of the place learned about it after movie star Grace Kelly became Princess Grace of Monaco in 1956 through marriage to Prince Ranier.
The way Ari accomplished this acquisition was by quietly purchasing a controlling interest in Societe des Bain de Mer, a public company trading on the Paris Bourse, which owned most of the principality of Monaco, including the famed Monte Carlo Casino where James Bond drops by to play Baccarat:
Being accepted in Monaco was the ne plus ultra of social climbing. You couldn’t go any higher. And if you owned the place, they would have to accept you. Onassis, a Greek born in Turkey, had always felt socially inferior, and having to compete with a brother-in-law like the polished, handsome Stavros Niarchos, who chummed around with Queen Elizabeth and Prince Phillip at Ascot, didn’t make it any easier.
So Onassis had bought Monaco, where he could rub elbows with the royalty of the rest of Europe. But he had gotten more in the bargain. Monaco, however small, was its own country, with its own laws. No other nation’s laws applied. If you owned Monaco, you could do what you pleased there, and nobody would object. (Source: The Invisible Billionaire: Daniel Ludwig by Jerry Shields)
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As we approach the end of the calendar year, there is someone we recommend you have a friendly conversation with: your accountant.
The end of the calendar year carries its own due dates that create boundaries and opportunities for you. A coffee with your accountant would be a smart move. Here are a couple of things you might want to say [choose your own words, of course] to spark some useful and potentially profitable conversation:
1. There’s a rumour out there that non-eligible dividend tax rates are rising in 2014. Should I pay out a larger dividend in 2013?
2. I heard that there are changes in how we have to report my foreign assets – is there anything new I need to put together to help you prepare for tax season?
3. I have a feeling that interest rates are going up – should I top up my loan to my spouse?
4. I sold my business in 2013 and have been thinking about giving back a bit, or getting more serious about philanthropy. Do I need to make a donation before year-end to offset this one-time tax hit? Is there anything I can do to still give me some time to strategize, or do my gifts need to be finalized by the 31st?
Also, there are less urgent, but not necessarily less important, tasks like:
• Review the beneficiary elections on your insurance contracts
• Any contributions you might want to make to TFSA, RRSP or RESP accounts
• Update wills and shareholders agreements
Finally, to take this up to our more customary big picture, before you make decisions on financial issues, it’s an excellent moment to think about four things: your values, the vision for your family and wealth, the mission you’re working to accomplish, and the specific goals you are working to achieve.
This is a good time of year for you to have a conversation with your key advisors, and especially your accountant. Your decisions are worth the extra few minutes.
My Vet sends me reminder letters … Why can’t my lawyer when it comes to my Will?
Leading up to the release of my new book Willing Wisdom, I paid extra attention to the mail I received. Delivered to my home over the course of three months, were reminder letters from a host of personal service suppliers, including my accountant to file my taxes, my window cleaner, my lawn service, my insurance provider and my veterinarian.
What I didn’t receive, in fact what I’ve never received over the course of my 51 years on the planet, is a letter from my lawyer reminding me to up-date my will. Curious to know if I’m special (and not in a gifted way) I recently asked my audience – about 200 business owners from across North America assembled at a convention in La Jola California – how many of them had received an annual letter from their lawyer reminding them to up-date their will? Only seven hands shot up.
The results confirmed my suspicion that, like me, 193 people in that room had windows and pets receiving better regularly scheduled maintenance than their estate plans. So what’s the deal?
More alarming is that when questioned on the subject, half of that room acknowledged they didn’t have a will at all. When pressed further, 50% of those who did have a will confessed that it had been more than 5 years since it was last up-dated. When questioned even further almost the entire room confessed to having clean windows, healthy pets and weed free lawns.
Approximately 125 million North Americans over the age of 18 have no will and will eventually die intestate. The resulting financial and relational devastation to families is incalculable.
When I asked my veterinarian how she could be so organized and proactive in scheduling my pet’s annual check-up she tilted her head side ways (kind of like the way my dog Goblin does when I say “treats”) she blurted out – “auto-scheduler”. She might as well have added …“duhhh.”
Asking her for detail on this cutting edge 25-year-old technology she noted it was free — as in it doesn’t cost anything.
Below is the letter I received from my veterinarian word for word.
To: Tom Deans
Annual physical examinations and a personal health consultation is integral to maintaining Goblin’s health. Please call our office to schedule an appointment. We’ve missed you and look forward to seeing you soon!
Dufferin Veterinary Hospital
If you’re not receiving a letter from your lawyer reminding you to up-date your will, would you consider forwarding this article to your lawyer and help them get acquainted with the power of “auto-scheduling” and helping clients keep their estate plans up-to-date? Here’s a sample letter for them to consider sending annually to clients like you.
A will is one of the most important legal documents for you and your family to consider. If one or more of the following apply to you, please call our office and schedule an appointment.
In the past year have you experienced?
- the birth of a child, grandchild or other close family member?
- has someone close died?
- have you acquired or sold a business?
- has your financial situation materially changed?
There are many other changes in your life that may affect your will that we would be pleased to discuss, including Powers of Attorney, Advanced Health Care Directives and the selection of Executor(s).
I look forward to meeting with you.
Your Lawyer Who Totally Gets that You are Busy and Reluctant to Think, Talk and Up-Date Your Will.
And while you’re at it, please remind your lawyer that no less than four US Presidents died without a will — two were lawyers.
To Book Tom Deans, a Lugen Family Office Speaker and The LFO 2013 Speaker of the Year Award Winner, to speak to Your Clients, Donors, or Employees at one of your events, please click here.
In Canada the top .01% of income earners have an average income of $6 million, and collectively earn 1.5% of our total income. Sounds like a lot until you look at the US, where the top .01% earn an average of $24 million each – which adds up to a 4.5% share of the total.
(from Canadian Business, Dec 9, 2013, Editor’s Letter by Duncan Hood)
Fortunately, there are a number of techniques for handling risks. The nature of a specific risk and the circumstances (extent of exposure, available resources, and so forth) often dictate which technique, or combination of techniques, is most appropriate. Basically, there are five methods for dealing with risk. It is easy to remember these by thinking of the acronym STARR.
Sharing—Sometimes, when a risk cannot be avoided and retention would involve too much exposure to loss, we may choose risk sharing as a means of handling the risk. By sharing risk with someone else, an individual also shares potential losses. That is, the individual’s own loss may not be as great if it occurs, but the individual may have to pay a portion of the losses experienced by others.
Transfer—Risk transfer means transferring the risk of loss to another party, usually an insurance company, that is more willing or able to bear the risk. Some non-insurance transfers of risk occur, such as when one agrees to assume the risk of another under the terms of a written contract.
Avoidance—As the name implies, this technique deals with risk by avoiding the risk in the first place. This usually means not undertaking an activity that could involve the chance of loss. For example, by never flying, one could eliminate the risk of being in an airplane crash.
Reduction—Sometimes, when risks cannot be avoided, they can be reduced. Risk reduction can work in one of two ways: it can reduce the chance that a particular loss will occur, or it can reduce the amount of a potential loss if it occurs. For example, installing a smoke alarm in a home would not lesson the possibility of fire, but it would reduce the risk of the loss from the fire.
Retention—Retention simply means doing nothing about the risk. In other words, people assume or retain the risk and, in effect, become self-insurers. For example, the insured would pay a smaller portion of the loss than the insurer, such as paying a deductible.
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