Not ev­ery­one wants to leave an in­her­i­tance

The McLeod River Post - - Viewpoint -

Un­til re­cently, pass­ing down an in­her­i­tance was some­thing to be ex­pected. Par­ents would save enough money so their kids would re­ceive some sort of wind­fall that they could then put to­ward their own re­tire­ments.

But sev­eral stud­ies over the last few years have shown that some boomers plan to spend what they have in­stead of pass­ing it on. While Cana­dian data on this sub­ject is sparse, a re­cent Aus­tralian study* found that one-fifth of baby boomers plan on dip­ping into their kids’ in­her­i­tance to take trips.

A 2016 U.K. study** found that one-sixth of peo­ple be­tween 50 and 70 plan to spend all of their money be­fore they die, while a 2014 re­port*** in­di­cated that 66% of peo­ple be­tween 50 and 65 would rather spend their money than pass it on to their chil­dren.

Chris­tine Van Cauwen­berghe, Vice-Pres­i­dent, Tax & Es­tate Plan­ning at In­vestors Group says that, in her ex­pe­ri­ence, most boomers still want to pass down some­thing to their chil­dren but many will likely end up spend­ing a much larger chunk of their sav­ings in re­tire­ment than their par­ents would have. “When boomers do a fi­nan­cial plan, it might be­come clear that they’ll need the ma­jor­ity of their as­sets to sup­port them­selves, es­pe­cially as they age and the need for costly med­i­cal care es­ca­lates.

“Peo­ple may need to use the money they’ve saved, but still want to leave some­thing to their chil­dren. In­sur­ance is one way to do both.”

If boomers buy life in­sur­ance, and if they con­tinue mak­ing pay­ments through­out their life, their chil­dren will re­ceive the pol­icy ben­e­fits upon the par­ents’ death. The par­ents can then spend more of their money dur­ing their life­time.

An­other op­tion is for boomers to hang on to their house un­til they die or un­til they have to move into an as­sisted liv­ing fa­cil­ity. The chil­dren can then sell the home and take the pro­ceeds as an in­her­i­tance. This op­tion can be­come dif­fi­cult when the boomer par­ents have their re­tire­ment money tied up in their house -- mean­ing they’ll have to sell to ac­cess those funds.

Whether to spend what they have now or pass some of it down is a de­ci­sion that should be made through frank dis­cus­sions be­tween boomer par­ents and their kids. “Ev­ery­one should know what’s hap­pen­ing,” says Van Cauwen­berghe. “Ex­plain your mo­ti­va­tions and be sure your true legacy is not just about money, but sup­port for ev­ery­one’s plans for the fu­ture.”

Your pro­fes­sional ad­vi­sor can help you make the fi­nan­cial and legacy de­ci­sions that are best for you.

*­ news-in­sights/se­niors-abroad-theaus­tralian-se­niors-se­ries

** http://www.dai­ly­ news/ar­ti­cle-3818803/The­baby-boomers-spend­ing-kidsin­her­i­tance-One-six-50-70yearolds-say-plan-use-money-die.html

*** Baby boomers spend the in­her­i­tance rather than pass it on, Fi­nan­cial Times: https://www.­tent/9b4a7bfe-593311e4-9546-00144feab7de

This col­umn, writ­ten and pub­lished by In­vestors Group Fi­nan­cial Ser­vices Inc. (in Québec – a Fi­nan­cial Ser­vices Firm), and In­vestors Group Se­cu­ri­ties Inc. (in Québec, a firm in Fi­nan­cial Plan­ning) presents gen­eral in­for­ma­tion only and is not a so­lic­i­ta­tion to buy or sell any in­vest­ments. Con­tact your own ad­vi­sor for spe­cific ad­vice about your cir­cum­stances. For more in­for­ma­tion on this topic please con­tact your In­vestors Group Con­sul­tant.

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