Waiting For An Inheritance

Have you noticed that your senior parents may be reluctant to discuss estate planning with their children? Obviously, there’s the discomfort of talking about death, but there’s also that long-time reluctance about discussing financial issues.

This lack of conversation between the generations may be contributing to poor retirement and estate planning.

Needing to fund retirement

A HomeEquity Bank survey a couple of years ago showed that more than one third of Canadians are waiting for inheritance money to fund their retirement rather than saving in pension plans. Another 45% are not expecting an inheritance, and 20% are not sure.

The survey also found that 94% of adult children over 45 want what’s best for their parents and they would be willing to forgo half of their inheritance to improve their parents’ lifestyle. Did you get that – they would give up HALF, not all. It’s not so much that they are greedy – they actually need the money.

Related: Are you counting on an inheritance?

It’s unfortunate that many boomers are not well prepared financially for their own retirements and are expecting an inheritance windfall to reduce their debts and provide an increased income to maintain their own lifestyle (but at least they aren’t the 34 per cent from a BMO study expecting to win the lottery).

Longer lifespan – higher costs

Many seniors would like to leave behind something to their heirs. But, first, they need to fund their own lives in retirement.

I recently watched a “Seinfeld” episode where George believes he’ll inherit hundreds of thousands of dollars from his parents because they have always lived so frugally. His hopes are crushed when he sees them walk into a fancy restaurant and they tell him they’ve decided to “blow it all.”

This desire seems not uncommon as HomEquity Bank found that 62% of the surveyed group say they’re not as concerned about leaving behind a large inheritance for their kids. Their own needs will be taken care of first and they are comfortable with wanting to enjoy their retirement. This feeling increases with Canadians over 65 (71%) presumably because they are already experiencing increasing costs.

Related: Leaving a legacy before the will is read

Also, keep in mind that people are living longer. Census data shows that the number of centenarians is increasing every decade. As parents get older, more money than planned is spent to finance their lifestyles especially health-related costs and daily assistance living. They are running through their financial resources – even tapping into their home equity.

Sharing the wealth

Many households share their wealth with younger generations while they are still alive. Grandparents pay for their grandchildren’s education as well as joint vacations with their offspring, and even living expenses. They also help family members buy houses or cars and pay off debts. Boomers are using their own potential estate to fund the care of their own parents.

Final thoughts on waiting for an inheritance

Financial advisors say it’s important for families to talk about their finances. The older generation is uncomfortable disclosing details, and adult children, in turn, are afraid of coming across as greedy. But, families need to establish realistic expectations.

Children waiting for an inheritance should start thinking about funding their own retirement instead of leaving it to chance.

In a HSBC study, the median expected inheritance was just over $77,000. That won’t fund a retirement for very long.

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16 Comments

  1. John on March 14, 2018 at 6:48 am

    Very good article Marie. I agree with your statement that “Children waiting for an inheritance should start thinking about funding their own retirement instead of leaving it to chance”. And when it comes to realistic expectations, these expectations should be that they have received all the love and education needed in their upbringing to stand on their own two feet. Pushed in the right direction so they can live life on their own and take care of their offspring. If the inheritance is so desperately needed to survive what of the next generation? I know my kids expect that there will be something left when we pass but they won’t need it to survive as they are on their way to be well off in their own rights. I hope we gave them the tools to live without still needing the help of Mom and Dad.

    • boomer on March 14, 2018 at 4:22 pm

      Thanks John. I totally agree with you. Over two thirds of respondents to a BMO survey think their children are ready to manage their inheritance because they have educated their kids about money. I’m not sure what to make of that considering other data that states many children will need the money to fund their lifestyles.

  2. Not Disappointed on March 14, 2018 at 9:02 am

    Good article. I am from a family of multiple siblings. I recently was made aware that my parents, for the sake of simplifying their estate, are planning on selling everything – lands, the family home, furniture… everything at one low fire sale price to one of my siblings. There will likely be no inheritance for the rest of us.
    I had always considered this as a possibility, it is their property and they can do what they want with it while they are alive and so am not disappointed. I have been working and saving and planning on funding my own retirement all my life, but I am pretty sure that at least one of my other siblings may be in for a rude shock. Life can throw unexpected surprises so an inheritance should rarely be depended on as a certain thing.

    • boomer on March 14, 2018 at 4:30 pm

      @Not Disappointed. While I agree that adult children should not necessarily expect an inheritance (or depend on it), I do feel it’s rather harsh to leave everything to one sibling and nothing to the others. In BC, where I currently live, I believe that it’s difficult for parents to disinherit a child and a claim can be made against the will and have it overturned. I don’t know what the laws are in other provinces though.

  3. Tom on March 14, 2018 at 12:04 pm

    Before he died, my father-in -law, who was living with us at the time, asked me how much was left on my mortgage. When I told him—it wasn’t an excessive amount—he said to make the arrangements and that he’d pay it off.
    I was totally surprised.
    What a great gift!
    I hope some day to be able to do something similar for my kids.
    Suddenly doors opened and retirement became a lot rosier.

    • boomer on March 14, 2018 at 4:34 pm

      Hi Tom. What a fantastic gesture! I think a lot more people are open to gifting money to their children and grandchildren while they’re still living.

  4. Lucy Right on March 14, 2018 at 1:11 pm

    I do not understand leaving inheritance to some children and not others.
    My mother got nothing because she was a female. I presume historically women were expected to be taken care of by their husbands. She was the only child without a spouse and raised children on her own. Earning a female salary she was the most in need. My grandparents were not stupid people so I wonder.

    Also a friend was left out of the will because he was guy. He cared for his parents knowing this up until the end. He took the high road which is much less traveled.

    I would like to suggest to leave something to everyone of your children even if it is not equal (as I think it should be) because they need the acknowledgement that they mattered to you and were loved.

    • Tom on March 14, 2018 at 6:40 pm

      Lucy, you are right on.
      I recently found out what was in my mothers will, and out of a lot of siblings and grand and great grands only myself and a nephew were off the will. Myself because my children are getting my share, and my nephew because he is trans. For myself i do not need it (which is why it was done) but it would have been nice to be acknowledged somehow, and it is sad for my nephew. For those considering omitting someone, at least acknowledge them please.

    • Sarah on March 14, 2018 at 7:14 pm

      Lucy and Tom, I also agree with you. There is this historical view that an estate should be left to only the single male heir, which might make sense for a large estate, but really, each child should get something.

      I also knew someone who was left out of an estate for identity dysphoria. Although it wasn’t trans identity dysphoria, it was anorexia which cost a lot for her in terms of therapy. There is a stigma with mental illness that it somehow is not possible to treat and that the person will be like that forever. This is because difficult to treat gets confused with impossible to treat. Sometimes it can be very expensive to get the therapy needed though and even a little will go a long way to helping someone suffering.

      I agree with this post though that you can’t always rely on inheritance and it is best to have your own plan else you wait for that big lottery win that never happens.

  5. JC on March 14, 2018 at 3:49 pm

    My objective for many years of my life has been to fund my own retirement and not be a burden to our kids. Many children, myself and my wife included, have had to support our parents in their latter years. I know and have known people who nearly drove themselves into poverty in their efforts to maintain for their parents a standard of life which they felt was due them. I am into my 80’s and hard to tell the future but it looks as if my plan will succeed. If it does that will be a great gift to our children. We are not trying to run the coffers dry so there might or might not be some left for their enjoyment.

    • Tom on March 15, 2018 at 9:05 am

      I like that idea.
      I sometimes say that my three grown kids have already received their inheritances—a debt free university education and, now that I think of it, equal amounts to contribute towards their weddings.
      But down the road, when the time comes, we’ll hopefully have some money leftover to leave them (and our grandkids.)

  6. Nigel on March 14, 2018 at 5:38 pm

    Personally I’ve always worked on the basis that an inheritance is a “nice to have” and not an “essential to have.” This way I manage within my resources rather than expecting a gift to bail me out. It also avoids the anger that many seem to exhibit when their inheritance turns out to be less than expected or some distant relative gets something they covet. Taken to the extreme, are people wishing their parents / grandparents would pass just to get them out of a financial bind!

    Inheritance is a gift from one generation to the next. Open discussion between family members will aid understanding of why older generations will want to retain control of their funds to see them comfortably through old age. Discussion can also open pathways where parents / grandparents can help their offspring before they pass without unduly compromising their retirement lifestyle.

  7. Cheryl on March 14, 2018 at 10:26 pm

    My parents were fairly well off and lived well. Not all parents are willing or able to fund their children’s education beyond high school the way many readers here seem to be planning. My parents told me if I wanted something badly enough that I’d find a way. I never had anything handed to me and if I asked for anything the answer would always be no and that I should figure out a way to pay for it myself. I wanted to be a lawyer and bringing home university brochures, and my mother asked me how I was planning to pay for that. I wasn’t eligible for student loans because their income was too high and back then finding information about grants and scholarships wasn’t as easy as it is now with the Internet. The couple that the high school counsellor gave me I applied for I was turned down. As a teenager and into my mid 20s I worked fast food and cashier jobs and between rent and food and car maintenance I lived paycheque to paycheque, working 2 or 3 jobs at a time just to survive. As I got older, my dream of attending university slipped away. Whenever I could put a little money aside I took night school and Saturday classes to learn how to type and work a switchboard to try to get better jobs in an office, but I’ve never had a job that paid over $20/hour. I’ve lived frugally my whole life and it was a relief to get a nice inheritance and know I wouldn’t have to worry so much about my retirement. I think I deserved it after a lifetime of constant struggle, especially when I know my parents could have helped me go to school and maybe I’d have been able to make a better life for myself. So yes I was definitely one of those Canadians who was expecting (and needing) inheritance money to fund my retirement.

    • Tom on March 18, 2018 at 6:26 pm

      Cheryl, it is sad that you were not able to get your dreams realized. For parents not willing to help post secondary, is not fair if you are also penalized by their high income.
      My parents were not well off, so they could not support any of my post secondary education, so i also got jobs, and relied on student loans and bursaries, and although i did not live well, i managed. My kids though were also penalized by my higher income, and despite my desire for them to manage on their own, i did help out a bit, and they managed to be independent.

  8. Chedi on March 18, 2018 at 11:32 am

    Ultimately the last interaction one has with their earthly relatives, is the one where the will is read. We are all still small children in adult bodies secretly wanting love and recognition from our parents. Whether you are rich and don’t need it, or dealing with mental health issues or are living life in a fashion that your parents don’t agree with (trans was mentioned above), if you don’t get equal treatment, it will hurt. It doesn’t matter all the good lifetime memories shared, that one last gesture will be the most memorable and lasting. Keep it even, Stephen. You want your remaining children, grandchildren and relatives to be speaking and a happy family after your departure. Not divvying things up equally is a sure formula for broken relationships.

    • Tom on March 18, 2018 at 4:38 pm

      Well said.

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