May 3: BEST FROM THE BLOGOSPHERE

May 3, 2021

A staggering $1 trillion in Canadian inheritance money will be transferred this decade

Writing in the Financial Post, columnist Jason Heath notes that we are headed for all-time records when it comes to inheritances in this country.

“Estimates of expected Canadian inheritances over the next decade are as high as $1 trillion,” he writes, adding that that figure could be driven even higher by stock prices and real estate values.

While articles (and books) have been written about the idea of “dying broke,” it appears most Canadians don’t follow that view. Heath notes that 47 per cent of adults over 55, in a 2019 survey by Merrill Lynch and Age Wave, feel that leaving their kids an inheritance was “the right thing to do.” Similarly, he writes, 55 per cent of millennials felt their parents had an obligation to leave them an inheritance.

The idea of leaving money for the kids isn’t always talked about in retirement planning circles, notes Heath.

“Many people spend their working years scrimping and saving to be able to afford to retire. Inheritance pressure after retiring may limit spending in retirement. It insinuates that workers need to save for not only retirement, but also their apparent inheritance obligation to their children,” he writes.

If you are going to be receiving an inheritance, Heath suggests you not be in a rush to make decisions about it.

“Some recipients see it as a windfall and spend it frivolously. Others see it as blood money and feel a great burden when they inherit,” he explains.

He recommends doing nothing with the inheritance for a time – leave it in the bank for six months, he suggests.

If you are on the giving end of an inheritance, you can consider giving money to the kids while you are still around to see them enjoy it, Heath adds.

“Some people would rather see their family enjoy an inheritance while they are still alive. Making gifts to children or grandchildren can be a great way to do so. There are no tax implications of a gift of cash to an adult child or grandchild,” he explains.

Just be sure, he warns, that you are not “passing along too much too early… so as not to risk your own financial security.”

The article goes on to look at some of the complexities of leaving an estate – “the choice of beneficiary designations, use of trusts, implementing an estate freeze, or insurance strategies can… reduce tax and probate costs.”

Did you know that benefits from the Saskatchewan Pension Plan may be payable to eligible beneficiaries upon your death?

If you die before you retire, the balance in your SPP account will be paid to your beneficiary.

If you die after you retire, any benefits payable depend on your choices at the time of retirement.

The SPP Retirement Guide provides details on the three types of annuity you can choose from when you start your SPP pension. While the life only annuity doesn’t offer survivor benefits, the refund life annuity can result in a payment to your beneficiary if you die before receiving annuity payments equal to your account balance at the time the annuity was chosen. The joint and last survivor annuity provides a pension equal to 100, 75 or 60 per cent of what you were receiving to your surviving spouse.

If you choose to transfer your benefits out of SPP when you retire, no death benefits are available from the plan.

These survivor benefits can ensure that a measure of the security SPP has been delivering for more than 35 years can continue to a beneficiary or spouse. Check out SPP today!

Written by Martin Biefer

Martin Biefer is Senior Pension Writer at Avery & Kerr Communications in Nepean, Ontario. A veteran reporter, editor and pension communicator, he’s now a freelancer. Interests include golf, line dancing and classic rock, and playing guitar. Got a story idea? Let Martin know via LinkedIn.

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