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When the executor read out the terms of their father’s will, Julia and her two siblings just stared at each other in stunned silence. “We were completely shocked,” recalls the Vancouver marketing specialist.

“My dad had done his best to control us while he was alive – now he was doing it from the grave.” What they expected to be a simple three-way division of their dad’s considerable estate turned out to be a complex set of instructions, sending his adult children cap in hand to his executor any time they needed a little extra cash to cover unusual expenses such as new vehicles, home renovations or weddings. The executor was empowered to veto any request their father might have deemed frivolous or unreasonable.

“In retrospect, what happened wasn’t all that surprising given the way my dad behaved while he was alive,” says Julia. “Even later in life, when he was in an expensive care home getting lots of attention, he expected the three of us to be at his beck and call 24 hours a day. He constantly changed his will, threatening to cut us out every time he disapproved of something we said or did. He never really approved of our choice of spouses and did everything to ensure that none of them would get his money.” Fifteen years later, Julia and her siblings must still seek permission to access family cash and provide receipts for every penny they spend.

As the original executor has since retired, they now deal with someone in the firm who never met their father. Fortunately, says Julia, under the terms of the will, when she or her siblings die, their children will inherit the remaining share of his estate – no strings attached. “It wasn’t as if we ever spent a lot of money on ourselves,” she adds. “We would have used it to make life better for our children. Hopefully one day, at least, their families will be able to benefit.” Much is written about the business of making money but relatively little about the way we pass it on to our heirs – either when we’re still alive or when we finally shrug off this mortal coil. But clearly it’s a pressing societal issue: more than a million Canadian households, according to Statistics Canada, now have a net worth of at least $1 million. On top of that, there are the super-rich. Forbes magazine counted 25 Canadian billionaires in its 2008 survey, about two per cent of the world total, with a combined wealth of US$88.4 billion.

In line with their penchant for tweaking all sorts of social norms, wealthy boomers are shifting away from traditional estate planning – dividing their cash and assets between the next generation – toward the newer concept of legacy planning: figuring out how they want to be remembered and how they want to contribute to their families, communities and the rest of the world. A 2005 survey by global insurance giant Allianz found that boomers and their parents actually felt that the non-financial things an individual leaves behind – values, morality, faith – are 10 times more important to them than who gets the stuff or the money.

However, while exceptionally wealthy Canadians (those with upwards of $10 million) are increasingly leaving the bulk of their estates to charitable causes, our need to leave a monetary legacy for the kids remains pretty strong. Economists have identified four basic motives for this. First, there’s the altruistic: the sheer pleasure of knowing our children will benefit. There’s the egotistic, when the bequest has more to do with our own selfish desire for immortality than to help our children. There’s also the strategic, when we use the promise of inheritance as a carrot to extract filial obedience, such as joining the family business, getting a degree, choosing a “suitable” mate or maybe even visiting us in our old age. Lastly, there’s the accidental motive: we may not intend to leave anything when we die, but we wind up saving more than we can spend, so our heirs luck out.

In most affluent households, the subject of who gets the family money – how much and for what reason – is still taboo; it’s rarely discussed around the dinner table, especially with the children present. Planning for our final exit still makes us feel uncomfortable. Indeed, TD Waterhouse reports that 49 per cent of Canadians don’t even have a will. But smart parents begin preparing children to handle their legacy from an early age. David Bentall says that, growing up in a relatively modest home on Vancouver’s west side, he had no idea he was part of the third generation of Vancouver’s premier real estate and commercial-construction dynasty. His father, the legendary Clark Bentall, firmly believed that everything had to be earned and frequently reminded his four children to “work first, play later.”

They were all taught the value of money and, despite the family wealth, were never showered with gifts. Bentall remembers two exceptions: when he was in high school, his father bought him a car and gave him a White Spot credit card, for unlimited use by himself and his friends. “In retrospect he knew I was involved with a church youth group and wanted to make it easier for me to get there,” says Bentall. “Plus he probably thought I wouldn’t get into trouble if I spent all my time at White Spot. Of course, he was right.” Bentall says he never viewed his father’s expectations as a burden or responsibility. He spent 20 years in the family business before selling his shares in Dominion Construction to his sisters in 1998, going on to found his own firm, Next Step Advisors. Today he specializes in succession consulting and executive and life coaching.

Bentall says he and his wife Alison initially disagreed on how to handle the subject of money with their children. He believed money must be earned; she favoured an allowance. “I changed my mind after reading the book Raising Money-Smart Kids, which stressed the importance of teaching children that money is a scarce resource. Bill Cosby also tells this great story about the time one of his children asked him to buy something. When Cosby said no, his son asked: ‘But why can’t I have it? We’re rich.’ Cosby replied: ‘Son, your mom and I are rich – you are not.’ I think that’s a very nice distinction.”

In his west side Vancouver counselling practice, therapist Stephen Madigan sees a lot of unhappy adult children of wealthy B.C. families. He says arbitrary decisions in the wake of a parent’s death, made without any discussion, or downright punitive final wishes – such as the estate plan made by Julia’s father – can unleash a toxic tsunami on surviving children, often pitting them against each other for life.[pagebreak]“After the will is read, one sibling might be left a certain object or a greater share of the family wealth, and as a result other siblings feel left out. It causes enormous tension and brings up deep, painful issues such as which child their parents loved the most. Too often a legacy issue comes out of the blue at a time when the children are already in shock, struggling with feelings of grief and loss. It can be very damaging to their future relationships.”

Many of Madigan’s clients struggle with repressed anger and resentment that resurfaces following a parent’s death. One man described how, under the terms of his mother’s will, he and his three brothers were to share the proceeds from the sale of the family home. “My client was very attached to the house and wanted to buy it, but his brothers would not agree to sell. It turns out they had a very different relationship with their mother growing up and never wanted to see the house again. As in many such situations, the issue wasn’t one of money or control: they just wanted to rip up their own painful childhood memories.”

Sibling infighting over an inheritance arises most often in families with serious communication problems, he adds. Parents may have historically mediated between their kids, but when they get sick or die and the children are left to battle it out, they simply don’t have the skills to resolve their long-held differences. Madigan advises parents to find a forum – such as a therapist’s office – where they can raise the issue of legacy planning and discuss their final wishes. “Children are often reluctant to talk about money because they don’t want to contemplate a parent’s death. I encourage them to listen to each other and ask important questions. It changes the whole issue of death and estate planning from something secretive and solitary into a positive process that involves the whole family.”

Legacy planning is no longer ­solely the purview of scions of old money and rich entrepreneurs; it’s fast becoming a priority for wealthy professionals – quite literally the hidden millionaires next door. In the past few years, soaring property values have boosted British Columbians up the prosperity ladder, at least on paper, with about 69,000 residential properties now valued at more than $1 million (according to 2007 property assessments from Landcor Data Corp.). As a result, a new set of first-generation millionaires are bypassing the do-it-yourself will kit and instead seeking advice from investment, tax, insurance and legal specialists on how to underwrite their last act and split their surplus cash between their children.

Whether we’re blue-blooded or self-made, we share the same paranoia when it comes to leaving money to our children: that young people with financial expectations will turn into unmotivated slackers, or that our offspring (or their spouses) will run through our hard-earned cash before we’re cold. Two years ago, a survey of the very richest Canadians – those with a net worth of $10 million plus – found they were wracked with anxiety around “transitioning” their wealth. Some 40 per cent of those polled by Vancouver-based Sensus Research said the greatest challenge of affluence was “maintaining a strong work ethic and a sense of values in my family,” while 24 per cent were concerned that their children or grandchildren would become less motivated because of family wealth (a syndrome dubbed in rich-lit as “affluenza”). Corporate heavyweights from Jimmy Pattison to investment guru Warren Buffett have said they oppose the concept of inherited wealth, with Buffett famously quoted as saying wealthy parents should leave children with “enough money so that they would feel they could do anything, but not so much that they could do nothing.”

Gifting substantial amounts of money to immature, dependent young adults can sometimes do more harm than good and can have a big impact on a young person’s future relationships. “When they meet someone, they always have to ask themselves, ‘Is it me she likes, or my money?’ ” notes Madigan. “I think they start seeing themselves as different, which can lead to withdrawal and isolation. It also brings with it feelings of guilt because they have so much money and think they ought to be happy, but all too often they aren’t.”

A good rule to follow, advises David Bentall – himself the father of four – is never to give your children anything that undermines their growth towards financial independence. “I have always said we will pay for a private-school education, cover part of their university tuition, buy them a first car and, when they turn 30 or marry, give them $200,000 to help with a down payment on a home. When we die, we will leave them some money – but they won’t get anything substantial until they are at least 40 years old.”

The concept of parents doling out cash while still alive may be gaining in popularity, but most wealthy Canadians continue to use trusts to ensure their children’s long-term financial security. Testamentary trusts, the most common type of trust, manage investments during our lifetime and beyond, distribute assets to heirs according to our wishes and minimize estate taxes. Advisors say the best legacy plans should grow and change over time and continue to evolve beyond our death. “Tax is the largest ongoing expense of the average Canadian, so any financial plan that doesn’t fully consider the consequence of tax is deficient,” says Malcolm Ross, president of Vancouver-based Investaflex Financial Group. He adds, however, that legacy planning is too important to leave in the hands of a lawyer, an accountant, a tax specialist or an insurance broker alone. Find someone who understands your aspirations and your family circumstances and who takes a multi-disciplinary approach including tax structuring, investment management and estate planning. [pagebreak]While most of us need only worry about disposing of our cash and assets, many of Ross’s clients face the added challenge of passing on their business. With 74 per cent of B.C. business owners planning on retiring within the next five years, corporate succession planning is of critical importance to our provincial economy too. But transferring ownership or disposing of a family business is fraught with problems. Only one-third of family-owned businesses survive the transition to the second generation, according to BDO Dunwoody, with only a third of those making it to the third generation. Many highly successful people, says Ross, expect their children to succeed in the same way they did. As a result, too many adult children toil unhappily beside a parent for decades, afraid to admit how they really feel, while others refuse to have anything to do with the family business. “Growing up they may have felt a workaholic father’s absence,” says Ross. “They’re determined to work shorter hours and spend more time with their own families.”

Some entrepreneurs are also extremely reluctant to relinquish control of the firm to their adult children. Ross recalls a discussion with a retired client who, despite having his 35-year-old son successfully act as company president for six years, refused to finally hand over the reins. “In spite of his son’s achievements, he still viewed him as a reckless 17-year-old who crashed his car,” says Ross. “That sort of thinking is actually quite common.” Part of his role as family advisor, Ross says, is to find out why clients feel the need to exert control over their adult children, especially when there’s no evidence of spendthrift tendencies or substance abuse, and to try to change their thinking.

In some cases, says Ross, succession is not the answer. “One of my clients was adamant that he wanted to leave his company to both his sons. I asked him, ‘If you sold your company tomorrow and gave your sons the money, would they use it to go into business together?’ His answer was no. Then I asked why he would want me to develop a tax structure that tied them together and would inherently fail? A better option was to sell the company and free his sons to get on with their own lives.” In David Bentall’s case, his decision to sell his interest in Dominion Construction when he was 42 years old was a defining moment in his life. “Back in Grade 10, I realized I preferred the real estate side of the business. Even though I had enjoyed being company president and seeing the business double in size, I realized that for years I’d been riding a pony I never wanted to be on, so I decided to get off.”

Legacy planning isn’t just about how you want your assets distributed between your children; it’s also about how much you want to give away in the form of philanthropy. Influenced by the nouveau largesse of the likes of Warren Buffett and Bill Gates, B.C.’s wealthy are beginning to enjoy the rewards of watching their surplus money put to work, both at home and abroad.

Carol Newell is one such example: a 2007 Order of Canada recipient who has given away more than $60 million of her personal wealth. Newell, who was only nine years old when her father died, watched closely as her mother transformed herself virtually overnight from housewife to businessperson – eventually taking her late husband’s place on the board of directors at the Illinois-based Newell Co., precursor to the vast Newell Rubbermaid empire.

“In retrospect it was a wonderful learning experience,” says Newell. “My mother took me to the bank, taught me how to handle money and, when I was in my teens, began to include me in family meetings with professionals. She was effectively showing me how to do everything from tracking a large stock portfolio to building teams, which is at the heart of what I’m doing today.”

At age 21, Newell received her first multimillion-dollar inheritance. She was in her 30s living on B.C.’s Cortes Island when her mother died, leaving her an additional $24-million share of the Rubbermaid fortune. Since then Newell has systematically, and without fanfare, given away most of her inheritance. She and her business partner Joel Solomon, himself a multimillion-dollar heir, formed the Endswell Foundation, which grants money to environmental and social-justice charities, as well as seed-capital company Renewal Partners. Newell’s advice to those who inherit wealth is to use it wisely and reap the rewards while living. Decide what issues are important to you and get professional advice on how best to use your surplus cash. “Wealthy parents need to teach their children fiscal responsibility and find out what they care about,” she says. “Today’s youth should be at the table when making decisions around family wealth because, after all, it’s their future.”

When Frank Giustra gave his $100 million to the Clinton Giustra Sustainable Growth Initiative, aimed at eradicating world poverty, he was quoted as saying, “If you leave money to your children, all you will have succeeded in doing is spoiling their journey. Do something that your children will be proud of after you’ve gone.” Other local entrepreneurs agree. Chip Wilson, founder and chairman of Lululemon Athletica, earlier this year donated $10 million to Imagine1day, a new charity he and his wife Shannon established to help educate children in Ethiopia. Their donation covers current and future administrative costs so donors know their entire gift goes where it’s needed most.

Wilson, the father of five boys (ranging in age from two to 19), says he has always been open with his children about the family wealth, from Lululemon’s challenging early roots to its wildly successful public offering. But above all, he wants them to know what it feels like to make a difference in the lives of others. “Money has never been what I’m about,” he stresses. “At the end of the day, the big question is, how do I really want to use the money I’ve made? More than anything, I want the world to be a great place so my children and my grandchildren can have a great life. And I want my money to make a meaningful, lasting contribution.”