Baby Boomers who are worried about how heirs will handle their inheritance have options when it comes to estate planning.
With the country’s largest intergenerational transfer already underway – around $1 trillion is expected to be left behind by Canadians Boomers between 2016 and 2026 – more than a third of affluent retirees have concerns about the financial literacy of their heirs, as well as their ability to manage a sizeable inheritance, according to a recent IPC Private Wealth survey.
Meanwhile, 20 per cent of respondents believe their children will have nothing to pass on to their grandchildren once their time comes.
One way to ease those fears is by opening up lines of communication. The same survey found 58 per cent of affluent older Canadians had not discussed instructions for their estate with beneficiaries, while 12 per cent had no plans to ever do so.
If testators are open with their beneficiaries about what to expect from the will and what they hope will be done with the legacy, they may find they’re pleasantly surprised by the response.
Setting realistic expectations can also drastically cut the chances of an ugly family feud over the estate – I’ve seen too many families torn apart by financial squabbles after the death of a loved one, and in my experience, it doesn’t take a huge sum of money to spark arguments driven more by emotion than anything else.
In extreme situations, testators may wish to consider disinheriting a wayward adult child who has proven themselves unreliable with money.
Alternatively, if you plan to leave a significant financial bequest to someone, and there are doubts about how they might handle it, an experienced estates lawyer can help testators set up various types of trust that allow them to exert a certain amount of control over how the cash is doled out after they’re gone.
For example, the testator can pick a trustee who may be able to help the beneficiary with financial decisions, and structure the trust so that money is distributed at intervals or for certain specific uses.
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