The Overlooked Donor
In November 2022, The Winnipeg Foundation, announced a $500 million estate donation from a 66-year-old businesswoman named Miriam Bergen. Ms Bergen is an exceptional example of a common but overlooked donor: the older person without kids.
Ms Bergen’s estate is larger and more complicated than most. She owned a business that was donated (a holding company that owned an operating company with 27 rental apartments). But her life situation is shared by an increasing number of Canadians. Individuals over 65-year-old without children are a growing segment in a generally greying society. Yet the financial and estate planning industry often focuses on families with children, succession issues, and family continuity. This is typified by the philosophy of many family offices. These planning biases send subtle messages of exclusion to persons who lives don’t fit the traditional family, or even modern family, formula.
Planning Challenges
While I don’t pretend to know Miriam Bergen’s situation or history, I suspect she faced a series of planning challenges. These include:
1. No default heirs
It is more difficult to choose estate beneficiaries when you have no kids. Children are default heirs – in all cultures and, to varying degrees, provincial law. Without children it is understandably easier to avoid drafting a will. The need to protect and provide for the next generation is less urgent. The challenge of selecting beneficiaries is greater.
2. Changing Circumstances
In my experience, individuals without kids are more likely to delay writing and updating their wills. They are also more likely to joke that they plan to spend all their money before they die. Avoidance of will drafting is often more acute with age and changing circumstances. The decisions become harder. I worked with an 82-year-old woman without children who agonized about updating her will. She neatly summed up the problem: “the nieces and nephews aren’t as cute anymore.” Nor were they part of her life in her later years. The logic of naming other members of the family as heirs – siblings and their children – changes with age, mobility, and their financial status.
3. Planning Bias
The wealth industry often structurally and implicitly favours younger clients who are growing their wealth. If you are an investment advisor, an older couple without kids – perhaps with a pension – may be perceived as less likely to bring in new investments, need insurance, or even a financial plan. They are also less likely to have power and prestige. These clients need a different kind of planning support – and it starts with having the empathy to see their situation and uncover their needs.
4. Less First-hand Experience with Charities
Canada is experiencing a charitable giving paradox. Fewer Canadians are donating regularly to charity. In 1990, 30% of taxpayers claimed donations; in 2019 it was 19%. And we are losing traditional community hub charities (particularly churches), which teach people how to give and incubate other charities. Yet the amount of total donations continues to increase, and mega donations ($10 million+) are an increasingly regular occurrence. Miriam Bergen, a low-profile woman in a same-sex relationship from Winnipeg, is the standard bearer of this new breed of donors, not billionaire families. They have greater wealth, can make larger donations, and have less lifelong connection with individual charities. This leads to an estate planning conundrum. The “name that charity” conundrum – the frustrating search for beneficiaries to fill up the will. Often this search is complicated by the fact that the proposed gifts will be large relative to a charity’s size and capacity.
5. Planning Certainty; Philanthropic Flexibility
Miriam Bergen avoided the “name that charity” trap by instead creating an endowment at Canada’s first community foundation, The Winnipeg Foundation. She gave discretion to the Foundation to make annual grants to benefit her city. Her decision – naming a single foundation she trusts and providing charitable purposes – is increasingly common. She named one major charity to provide planning certainty (will and tax plan done!) and philanthropic flexibility. At Aqueduct Foundation, most of our legacy fund donors don’t have children. They also plan to give the majority of their estate to charity and have many charitable interests. A legacy fund is a one-stop solution that supports donors to continue to think and plan their philanthropy after the will is executed and before money is donated. It’s personal and prescient. It’s forgiving and practical.
Older clients without children have built up significant wealth and are increasing in number. It is time for the wealth planning industry to pay more attention. It is time to provide these older individuals with greater support for their estate and philanthropic planning needs.