Die with zero. More Canadians are giving an inheritance early and enjoying the money now


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Maybe you’ve heard the saying “shrouds don’t have pockets?” This means that you cannot take your money and possessions to the grave. It’s a dark but real concept American businessman Bill Perkins, author of die with zerois a big supporter of.

The idea is that once you have saved enough to fund your retirement and giving back to your family or even charities, then you should focus on memorable life experiences. Ultimately, after spending your money on experiences, you won’t leave any money behind.

Leaving no legacy may seem strange, but it’s a growing trend. In addition to giving your children money for a house, it can be a smart way to transfer wealth from one generation to the next, while avoiding potential risks. real estate taxes.

“I would personally say, in my business, this has increased over the last three to four years, during and after the lockdown,” says Treena Nault, CFP and financial adviser at IG Wealth Management.

Helping the younger generation

The pandemic has given families time to think about their finances, according to a report by IG Wealth Management last year. The report suggests the shutdowns have given some people the chance to save more by cutting back on expensive consumer spending such as travel and entertainment.

What do they do with these savings? The IG report suggests that families are ready to help the younger generation with education, housing and starting new businesses. All of this is happening against the backdrop of an increase in the number of households with accumulated investable wealth of at least $1 million, a 93% increase since 2006. Additionally, the amount of wealth controlled by these families financially prosperous increased from $1.6 billion to $4.2 trillion.

“I think the highest priority is to give a boost to this young generation who are going through a very the high cost of living“, explains Nault.

“…people say they don’t want to help them, they want to help them.”

Parental support also parallels what is happening in the real estate market. The survey cited in the IG report suggests that future parental support for a first home purchase was highest in British Columbia at 33% and Ontario at 30%, the two provinces hosting the strongest real estate markets. most expensive in the country.

Increase in wealth transfers since the pandemic

Another financial service, Edward Jones, also noticed this trend in his research.

Julie Petrera, senior customer needs strategist at Edward Jones, says her firm’s 2021 research suggests around 64% of Canadians would prefer to leave a legacy – or at least part of one – in their lifetime. .

“We have seen an increase in wealth transfers since the start of the pandemic,” Petrera said.

However, inflation record and exorbitant interest rate complicate feelings.

“Preliminary results this year indicate a decline of around 10% year-over-year,” Petrera said, explaining that the economic environment has changed.

Longer life, more expense

A longer average life expectancy also complicates people’s desire to give their children more during their lifetime.

“As life expectancy continues to increase, the average length of retirement increases and, therefore, so does the cost of retirement,” added Petrera.

In a study published by Edward Jonesrespondents said the ideal length of retirement is now 27 years.

“It’s been three decades of planning and saving.”

“The majority of respondents indicated that retirement is a new chapter in life rather than a time of rest and relaxation. Maintaining an active lifestyle comes at a cost, which again needs to be planned and saved appropriately,” Petrera said.

“So while the trend of Canadians leaving a lifetime legacy has continued, we’re seeing a little more hesitation than before the pandemic.”

Give or take care of yourself

Trying to help children in times of economic hardship, while ensuring their needs are met, is a delicate balancing act for parents.

“They have to plan it out instead of being very spontaneous about it,” Nault said.

Nault says that if a client calls her expressing a desire to donate around $100,000 to a child, her immediate response is to pause and think.

“I’m not saying the client shouldn’t do this,” Nault explained, “But let’s actually look at the client’s retirement and estate plan and see how that fits in, because there are other considerations. »

Nault advises parents to be fair and not give one child more than the other, all in the hope of avoiding family feuds.

Is it better to die with zero?

So is it better for a person to die with zero and pass on assets to their children as gifts while alive?

“Well, it’s pretty hard to plan,” Nault said.

Instead, the financial advisor offers advice that she gives to her clients.

“If you are going to die with possessions, die with a tax-free savings account fully completed because the tax-free savings account can go to your spouse or your children, or anyone else, quite frankly, tax-free,” adds Nault.

Petrera also expressed complicity in the decision.

“Most Canadians cannot predict how long they will live. If you plan to die without money, you run the risk of outliving your money,” Petrera said.

“On the other hand, we also see Canadians who see dying with too much money as a risk as well.”

Ultimately, it’s a personal decision and every situation is different.

“For some people, that’s absolutely their goal (to die with zero),” Petrera said.

“But others might want to plan to leave their legacy upon death, as a gift to a loved one or a donation to charity. And others may want to leave enough money to pay off debts, funeral expenses, or other end of life costs.”

This article provides information only and should not be construed as advice. It is provided without warranty of any kind.

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