Canadian Millennials are rolling the dice and not seeking financial help or professional advice when they receive an inheritance, according to a new survey from TD Bank. The survey uncovered that while 83 per cent of Millennials who have received, or who anticipate receiving, an inheritance feel confident in their ability to manage their inheritance, nearly half (46 per cent) of those who have already inherited wish they had sought professional advice on how to manage their new-found wealth.
With the largest ever transfer of wealth set to occur in the coming yearsi, the stakes have never been higher for Canadians who receive an inheritance – Millennial or not. Correspondingly, seeking advice on managing this wealth windfall is more important than ever.
“Managing an inheritance can be incredibly overwhelming, especially for those Millennials who are typically not as well-versed in managing larger sums of money or assets. When receiving an inheritance, it is all too easy to become overwhelmed and make decisions you later regret,” said Jeet Dhillon, Vice President and Senior Portfolio Manager, TD Wealth. “This is particularly true in cases where a large inheritance makes you a high-net-worth individual overnight, as the sums involved tend to be bigger and the consequences of the choices you make are magnified.”
The survey also showed that four in ten (41 per cent) Canadian Millennials expect to receive an inheritance or have already received one. Of these, six in ten (60 per cent) anticipate they will receive cash, while just over half (53 per cent) foresee inheriting a property or the proceeds from the sale of one.
“The value of your inheritance may be greater than anticipated, and once received, it can be difficult in the moment to make strategic decisions that will benefit you and your family for the long term. It’s important to pause, determine what your short and long-term financial goals are, and develop a comprehensive plan with your advisor that will help you meet those goals before taking on any new financial commitments,” continued Dhillon.
TD offers the following tips and advice to Millennials and all those looking to make the most of their inheritance:
Tackle Financial Fundamentals First
Regardless of the value of your inheritance, prioritizing spending can help maximize its impact when it comes to meeting your long-term goals. Rather than using your windfall for luxuries, consider alleviating your existing financial commitments and plan for the future. This may free up more of the money you earn for the things you enjoy.
Plan Your Own Estate
Receiving an inheritance can often be a wake-up call to write a will of your own – something many of us put off. In cases where the inheritance is more than expected, working with an estate planner can help you consider your options. Creating an estate plan may also allow you to minimize costs and taxes, and help you to maximize your wealth.
Inheritance shouldn’t be Taboo
Only 1 in 10 Canadians (9 per cent) say they discussed how they will put their inheritance to use with the person they inherited from. As planning is impossible if you don’t know what to expect, prompting a frank conversation about your legacy with loved ones is key.
Work with a Trusted Advisor
An advisor can help you meet your financial goals by providing a holistic picture of your finances by considering a range of factors, such as the implications of tax planning and the potential return on any investments.