Four of Life’s Most Critical Questions

Amelia ZhangBlog

Four of Life’s Most Critical Questions

Answering these million-dollar questions could save you millions of dollars.

Most of us are  busy, and many of us feel swamped. The demands of all the urgent things in our life keep us from focusing on the important things. After nearly 30 years providing financial advice, I believe the following four questions for higher net worth families are the most important to ask, and answering them could save them $100,000s, probably even $1,000,000’s. The problem is that no one is asking them or getting the answers.

1. How Much Is Enough?

What is your finish line? How much do you need in savings to fund the years you will not be working for money? Not knowing the answer causes stress and anxiety. We don’t know if we can fund our preferred future or not. Our focus is on accumulating more. Answering this question brings tremendous clarity and allows us to make much better life decisions because they are not based on money or uncertainty. Clarity about where we are on our financial continuum brings us contentment because we either know we have enough, or we have a plan to attain enough. As a result, we have the freedom to live life the way we want to. The other massive benefit is that we can follow our heart instead of our wallet. We can make decisions based on what is best for our relationships, mental & physical health, family, development, etc. We have peace and contentment knowing we will be fine financially. To learn more, check out this article.  

Clarity about where we are on our financial continuum brings us contentment because we either know we have enough, or we have a plan to attain enough.

2. How Much Is Enough for Our Kids?

As parents, we want our kids to have a better life than our own. But we also do not want to wreck them. Helping our kids financially is great, but at what point does our blessing become a curse? When does our hand out begin to rob them of the need to have a strong work ethic, confidence from overcoming obstacles, gaining independence, and the need to develop themselves? The gift of struggle is very valuable. Most wills simply spread the parent’s assets among their children without regard to the impact on the children. We all know children who have been wrecked by being handed too much. I write more about how to find the answer in my blog How Much is Enough for Your Children.

3. How Much of Our Estate Will Go to Tax?

For most people, 50% of your RRSP/RRIF account value, 35% of the increased value of your cottage (even if it is left to the kids), and 35% of the increase in your business value or open investment accounts will go to tax on the death of the last surviving spouse. Your situation may be different, and you need to speak to your tax professional to know for certain, but I’ve outlined the general reality. No one knows their tax bill if, God forbid, there was an accident and both spouses were gone. This is a critical number you should know because if you don’t like the number, you can change it with proactive financial, estate, and tax planning. But you can only change the number while you are alive. This past article provides valuable insights on how to right-size your tax bill.

4. What Do We Do with The Rest?

I believe there is a limit on what is healthy to accumulate for our own lifestyle and future. Most parents believe there is a limit on what is helpful to pass to our kids. Taxpayers want to control what they pay in tax. This means that for many people, their assets exceed the sum of these healthy limits. If you want to make a difference in the causes you feel strongly about, in your community, and beyond, your generosity with your excess assets can make a big impact. Increased generosity to charitable causes can reduce your annual tax as well as your tax on death. You make an impact and some of that donation comes from money that would have gone to the tax collector. There are some unique giving strategies available so if you are in a healthy financial position, it is important to discuss your situation with financial professionals that have a strong background in generosity.

These four questions, if properly answered, will change your financial future and likely the health of your family relationships. They also have the potential to save higher net worth families $100,000’s, likely $1,000,000’s in tax. I know of no other way to make a greater impact on your financial future. If you’re ready to answer these questions, contact us today.

Gain Clarity, Contentment, and Freedom in your Family Wealth.

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