BY MONICA MAZUN
I recently heard a story about a grandparent who was leaving a hand-written letter detailing the future inheritance of each of her grandchildren. As much as this grandparent wanted to pass down wealth to the next generation, she also wanted to pass down her story and a piece of history with each gift. I thought this was beautiful: her gesture would humanize the process and the gifts and bring focus back to what matters most.
Economists estimate that we will see approximately $1 trillion in wealth passed from baby boomers
to Gen Xer’s and millennials by 2026. If that seems immense, it’s because it is. Known as “The Great Wealth Transfer”, this will be the largest intergenerational transfer of wealth in Canada’s history, which makes it more important than ever for Canadians to access sound financial advice and wealth planning strategies.
Whether you’re giving or receiving, it’s imperative that you work with someone you trust to help navigate what can be an extremely complex process. If you’re the giver, there are many questions that can aid in directing your wealth transfer. What are the pros and cons of gifting now versus after death? You might want to gift your adult children over the coming years so you can see them enjoy what you’ve given them. How many generations would you like your wealth to span? You might want to invest in a tax-exempt insurance policy that benefits your grandchildren and future generations. When do attribution rules (provisions within the Income Tax Act) come into play? It’s important for your voice to be heard, and it’s equally important to access solutions that are tax efficient and make sense for your situation.
If you’re receiving a gift or inheritance, it can feel overwhelming if you’re unsure of what to do with it. Financial education is now readily available, be it through reading the news or listening to financial podcasts; but seeking expert advice can have the biggest payoff. Having someone listen to your goals and build a financial plan is an important first step. Your current priorities might include such things as paying off debt or saving for a child’s education, but you should also, now, consider looking at the big picture and planning for the next transfer of wealth.
Many investment advisors have tax and estate planning teams to support them, which can be a great advantage and something to keep in mind when you’re looking for an advisor. When you deal with such specific and complex matters, it’s reassuring to know there’s a whole team of experts guiding you. As our team always says, two heads are better than one – especially when it comes to your legacy and the impact you can have on generations to come.
All material has been prepared by Monica Mazun, who is an Associate Investment Advisor with the Mactaggart Hryn Team at Richardson Wealth Limited. The opinions expressed in this report are the opinions of the author and readers should not assume they reflect the opinions or recommendations of Richardson Wealth Limited or its affiliates. Richardson Wealth Limited, Member Canadian Investor Protection Fund. Richardson Wealth is a trademark of James Richardson & Sons Limited, used under license.
