Don’t gamble with your inheritance: survey

Canadian millennials are rolling the dice and not seeking financial help or professional advice when they receive an inheritance, a TD Bank survey warns.

“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,” says Jeet Dhillon, Vice President and Senior Portfolio Manager, TD Wealth.

According to the survey, 83 per cent of millennials who have received or who anticipate receiving an inheritance feel confident in their ability to manage their inheritance. That’s in stark contrast to 46 per cent of millennials who have already received an inheritance and wish they had sought professional advice on how to manage their newfound wealth.

“When receiving an inheritance, it is all too easy to become overwhelmed and make decisions you later regret,” Dhillon says. “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 largest-ever transfer of wealth is set to occur in the coming years. Four in ten Canadian millennials expect to receive an inheritance or have already received one. Of these, 60 per cent expect to receive cash, while 53 per cent expect to inherit a property or the proceeds from the sale of one. TD offers the following advice:

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 be a wake-up call to write a will of your own. 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 help you minimize costs and taxes while also maximizing your wealth.

Inheritance shouldn’t be taboo. Just one in 10 Canadians have discussed how they’ll put their inheritance to use with the person they inherited from. Have a frank conversation with your loved ones so they know what to expect and can plan accordingly.

“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,” Dhillon advises. “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.”

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