At Cooper Schneider Financial, we are meticulous in the way we monitor financial trends. Trends offer insight, opportunity and, perhaps most important of all, warnings. Not all warnings are necessarily negative, of course, and here is one that may positively impact you and your family – we sincerely hope so.
Did you know that Canadians between 50 and 75 years old are poised to inherit $750 billion over the next decade? It’s the largest intergenerational wealth transfer in Canadian history, and it’s happening now.
Wealth the next generation is set to inherit
According to noted economist Benjamin Tal – whose credentials include membership of the Economic Committee of The Canadian Chamber of Commerce and The Economic Development Committee of the Toronto Board of Trade – the average net worth among the 2.5 million Canadians currently aged 75 and up has risen 30% between 2005 and 2012. This is the wealth that the generations coming behind them are set to inherit.
The complexities of intergenerational wealth transfer
Intergenerational wealth transfer requires considerable thought and tactful execution. Three immediate personal and family issues comes to mind: the creation of a fair legacy for one’s children, minimizing taxes on existing wealth, and ensuring financial security for future generations.
How we can help
We have helped innumerable individuals and families negotiate this terrain by counseling our clients to consider four (there may be others) key factors:
- Estate planning – ensuring an estate is distributed in a fair and tax-efficient manner.
- Tax minimization – helping improve after-tax investment returns through, for example, income splitting and tax-deferred investing.
- Retirement income planning – creating, particularly if the intergenerational assets are derived from a family business, a tax-efficient Individual Pension Plan.
- Education savings – creating a family trust for tax-efficient education savings supported by education payment options.
For those of us fortunate enough to be in line for a sizeable inheritance, there are several potential – and quite complex – issues to consider, the resolution of which requires professional assistance. We would be happy to help in any way we can.