Many Baby Boomers relying on inheritance to fund retirement
Most Canadians expect to receive an inheritance at some point in the future
Over the next 20 years, according to the Toronto Star, Canada is likely to see the biggest inter-generational transfer of wealth in its history, as Baby Boomers look set to inherit the wealth of their aging parents. In fact, most Canadians say they expect to receive an inheritance in the future. For many people, an inheritance will be central to enjoying a comfortable retirement. Without discussing such an inheritance beforehand, many Canadians may find themselves with far less than they expected to receive.
Largest inheritances are in British Columbia
A survey conducted last year by BMO InvestorLine found that 60 percent of Canadians expect to receive an inheritance in the future. Currently, the average Canadian inheritance is about $100,000, although British Columbians are already inheriting much more than that. The average inheritance in the province is over $120,000, higher than anywhere else in the country. Over the next two decades about $1 trillion is expected to be passed on from one generation to another in Canada, with the primary beneficiaries being Baby Boomers.
When asked what they intended to do with their inheritances, planning for the future was the top concern for many. Most Canadians (91 percent) say they would save their inheritances for “key life events,” including retirement. Likewise, 79 percent of Canadians plan to use an inheritance to pay off debts, which could also help many afford a more comfortable retirement lifestyle.
Talking about inheritance
As the Globe and Mail recently pointed out, despite the fact that inheritances are likely to play a significant role in many peoples’ lives, the topic of inheritances remains taboo in many families. Many parents are reluctant to broach the subject for a number of reasons, including a fear of confronting death and a worry that their children will become lazy if they are aware of how much they are set to inherit. While most Canadians expect to benefit from an inheritance, few, it would seem, are aware of how much they will actually receive.
Talking about inheritance can be difficult, but the consequences of not doing so are usually far worse. As the above survey suggests, many people are looking forward to an inheritance in order to fund their retirements. If those beneficiaries find out that they have been left with far less than they expected, then disputes could arise among the various beneficiaries. Experts say that parents need to be upfront with their children about how they want their estate divided once they pass away. While such discussions may be difficult at first, they will help avoid conflict and disappointment in the future.
For anybody who has a concern about an inheritance, whether as a will-maker or as a beneficiary, it is vital to talk to a wills and estates lawyer. An inheritance is simply too important a matter to leave to chance, and a qualified lawyer can help clients understand what their options are to ensure their interests are protected well into the future.