In terms of wealth transfer to younger generations, the next decade will see what some are calling a “bequest boom.”
To put the matter in perspective, consider that in 2015 an estimated 16 per cent of Canadians were over the age of 65, and there were more Baby Boomers than children aged 14 or younger. In fact, Boomers themselves are expected to inherit $750 billion in the next 10 years. However, as you might expect, the transfer of wealth is not expected to be even across all income levels.
One economist has said that, among the 2.5 million Canadians who are aged 75 or older, average net worth rose 30 per cent between 2005 and 2012.
At the same time, inheritances going to those earning more than $100,000 a year are expected to be three times higher than inheritances going to lower-income Canadians. Additionally, higher-income heirs are often able to save their inheritances, while lower-income heirs more often than not end up spending their inheritances to cover bills and other expenses.
Whether you plan to use your inheritance to retire, travel, pay down debt or even start a new business, it is important for families to consider the full range of options for preserving assets and minimizing tax obligations. After all, inter-generational wealth transfer can have significant financial (and emotional) consequences for all parties involved, and communicating with regard to these matters can help ensure that everyone is on the same page.
Whether you intend to distribute wealth to younger generations or you expect to inherit assets, planning now is the surest way to protect your interests and those of your family.