As some of the youngest Baby Boomers turn 60 this year, and the oldest approach 80, the greatest intergenerational wealth transfer is now in motion. It is expected that over $1 trillion of wealth will be transferred to Canadians — a number that has grown with the price growth in the financial and housing markets.1 Consider that the S&P/TSX Composite Index Total Return is up by over 3,000 percent since the start of 1983!
Mirroring the distribution of wealth, this transfer is expected to disproportionately affect higher-income households. In Canada, the top 20 percent of households hold more than two-thirds of all net worth, compared to the bottom 40 percent, which hold just 2.8 percent.
Have you prepared for your own wealth transfer? Back in 2017, a survey suggested that only 22 percent of high-net-worth Canadians had a detailed plan to pass along assets, though nearly 60 percent were not confident in their children’s ability to preserve or grow their inheritance.4 One of the more positive outcomes of the pandemic appeared to be that more Canadians were influenced to put a greater focus on estate planning, at least when it came to the basics of preparing a will.5 However, a recent Angus Reid poll suggests this may not be the case: the statistics about wills haven’t significantly changed
As the costs of living, housing and raising families continue to surge, for many investors the tactics of estate planning may also be evolving. Some are pursuing a “giving while living” strategy. Others are using insurance or trusts to help support future generations and create a lasting legacy. If you have yet to give your estate plan the thought it deserves, why not make this a priority before year end? It has the potential to enhance your overall wealth management and can be one of the greatest gifts you leave for your loved ones. For ideas on where to start, please call.
