Inheritance Money

Significant Inheritance Coming for Half of Households

According to data from Statistics Canada, nearly 50% of households can expect to inherit a significant amount. In fact, the aggregate net worth in 2012 of all senior households was $2.18 trillion while the number of households headed by someone between 45 and 65 was 5.8 million. Dividing the numbers, each household would receive an average inheritable amount of $375,000 prior to factoring in taxes. And studies have shown that seniors over 70, and even more so over 80, are net savers (probably mostly from pension benefits,) which means their net worths are likely to get even bigger before passing down their inheritances. 🙂

In a more recent survey of about 1,500 people, investment firm Edward Jones reported that 49% of Canadians are not expecting a “significant” inheritance. I’m not sure what defines significant in this case. But that would also mean 51% of Canadians do expect a meaningful inheritance. Yay! The survey also found that “61% of those aged 55 to 64 and 57% of those aged 65 and older are expecting to leave a “significant contribution” after they die.” This is good news. It means most of us are getting some kind of inheritance. 🙂

Don’t Screw Up Your Inheritance

For those of us who are lucky enough to receive an estate windfall, it is important that we know how to manage it. Living modestly can make our winnings last a lifetime. We should also try to avoid what Lorette Taylor did in this CBC article. After her father passed away she was tasked with disbursing the inheritance money. This includes giving $846,648 to her brother who lives 5 hours away from her by car. So she obtained a bank draft for $846,648 which was addressed to her brother and sent it to him via UPS.

However, UPS lost the package. 🙁 It became an uphill battle for Lorette, but after nearly a year TD has finally agreed to settle the matter and write her another bank draft.

Something silly like this should never happen to anyone. In terms of who was at fault, I think everyone made some mistakes. UPS messed up because it failed to deliver a basic service and lost the client’s bank draft. TD screwed up because it didn’t train its worker properly to advise a wire transfer or EFT in this situation, instead of a bank draft. And Lorette also should do some research and ask more questions before handling the inheritance money. A bank draft is as good as cash. Unlike a regular cheque, the money is immediately taken out of a client’s bank account as soon as the bank draft is created. You can’t cancel an existing bank draft in the same way you can a personal cheque. If Lorette understood how bank drafts works in the beginning she probably wouldn’t have trusted it to UPS. This is why no matter how much money we have, we also need financial literacy if we plan to hold onto our money.

The lesson here is to use wire transfers (which is traceable) when moving large sums of money, such as an inheritance. And also, never send a bank draft in the mail. 🙂


Random Useless Fact:

Superstition in Bangladesh leads to overweight crocodiles.

Author: Liquid Independence

Editor in Chief at Freedom 35 Blog.

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12/18/2017 8:16 am

I feel like this is sort of at odds with the “Retirement Crisis” that others are railing on about. I know that there are a lot of boomers who haven’t saved enough but I bet a good portion are going to be bailed out be their parents who grew up during a world war and were living a much simpler lifestyle.

As for me, I’m planning based on receiving nothing and I’m more worried about suddenly finding out my parents were idiots and saved nothing to be honest.

12/18/2017 9:58 am

Oh I didn’t know bank drafts were as good as money and that you can’t cancel the draft when it’s lost. Good to know. Have you looked into death tax? I can’t remember the terms of it but if your parents pass away and leave you a property, you will need to pay taxes on it unless they have you on the title as well.

Tom @ Dividends Diversify
12/19/2017 4:32 am

Interesting post and article. I agree with smoking’s comment. Sometimes you read about the great windfall that will be passed on and sometimes you read about the lack of retirement readiness. Not sure which to believe. On a side note, before doing a wire transfer, make sure to double verify the recipients wire instructions. Wire fraud is becoming more common. It’s hard to get the money back if it falls into the wrong hands. Tom

12/19/2017 6:51 am

No inheritance for me. I will have to work for much longer because of that. I am already seeing people my age(barely 50) benefit from selling their late parents principal residence and splitting the proceeds with their siblings. A windfall, even if it comes from sad circumstances, is life changing.

Lottomax is 50 million this week. That is my only chance at a windfall and early retirement.

12/20/2017 7:20 am
Reply to  beth

Having dead parents is also life changing.

Doesn’t matter if yours are rich or poor, if you still have them, you are wealthier than those who “split the proceeds”.

12/22/2017 5:28 am
Reply to  Guy

I agree 100% with this. I know many people who would trade any money they got to have their parents around still.

12/23/2017 5:01 pm

Wow! drafts can be cashed by anybody. It is very interesting that TD cannot cancel the draft even though no body cashed it. There should be a way right? They know the draft is missing and there must be a way to stop somebody from cashing it out. Nice reminder: the banks are not there to serve the customers. Glad that the story ended happily.