"You cannot separate emotions from it," confides Ann, a single woman who moved from the East Coast to Toronto not long after her father died last year. "I just wouldn't want to dishonour lots of hard work by spending frivolously. It's a feeling of added responsibility. I mean, Dad worked his guts out for 40 years. I don't want to screw it up."
The amount of money passing between generations of Canadians is expected to grow at an unprecedented rate. A 2007 report on inheritance from Decima Research says Canada's frugal seniors and affluent baby boomers will leave nearly a trillion dollars to their offspring in the years to come. And while the average inheritance in Canada is $56,000, Decima predicts the figure will swell to about $300,000 in cash, real estate and other valuables. The state of estates is in a fascinating flux.
After the windfall
The bittersweet bonanza leaves many heirs bewildered by the tax implications and wondering what to do when the inheritance cheque lands in their hands. "That can be very dangerous," says Ann. "Because there are a lot of people in this world who might go out and blow the whole thing in a week, and that's not appropriate."
Financial experts agree. Unless you're well-heeled to begin with, flushing the funds into trips to Las Vegas, sexy cars and plush home theatres probably isn't the smart way to go. It's best, they say, to take a breath.
"Some people are actually quite frozen when they receive an inheritance from someone close to them. They almost feel the person in it," explains Sandra Foster, author of You Can't Take It with You: Common-Sense Estate Planning for Canadians (Wiley, 2006, $27.95). "My feeling is when you receive money, put it somewhere safe that earns a good guaranteed rate of interest for a few months while you think things through. Don't do anything rash."
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