Passing it on: With over $1 trillion to be Transferred Over Next 20 years - Will Inheritance Expectations Meet Reality?

    New BMO Retirement Institute study reveals that 70% of Canadians believe
    that future legacies will be unscathed by current economic conditions

    TORONTO, July 15 /CNW/ - In Canada, it has been estimated that Boomers
stand to inherit approximately $1 trillion over the next twenty years(1).
According to new research from the BMO Retirement Institute, despite recent
economic turmoil, Canadians' expectations of the massive transfer of wealth to
Boomers have not dampened. Regardless of this positive outlook on future
inheritances, the study also reveals that most families have not adequately
addressed all the challenges associated with the biggest transfer of wealth in

    The survey indicates that:

    -   Almost 30 per cent of Canadian Boomers are expecting to receive an
        inheritance from someone in their immediate or extended family
    -   Less than one-third of those expecting an inheritance felt it would
        be smaller than previously thought due to the recent economic crisis
    -   Almost one-in-four Boomers said they will be relying more heavily
        than expected on their inheritance to reach their financial goals due
        to the recent economic crisis
    -   Less than 3 per cent of Canadian Boomers say they will be unable to
        leave an inheritance due to current economic turmoil

    Factors Impacting the Size of Inheritance

    While there are obvious uncertainties involved in the transfer of wealth,
such as timing and the monetary value of the inheritance, there are less
evident factors that may not be top of mind.
    The latest BMO Retirement Institute report, Passing it on: What will
future inheritances look like?, identifies a number of distinct challenges
that can impact the size of an inheritance:

    -   Life Expectancy and Retirement Age
    -   Unanticipated Events and Health Care Expenses
    -   Challenging Markets, Interest Rates and Inflation
    -   Taxes on Death
    -   Family Size

    "Despite these challenges, there are strategies that Canadian families
can take to help achieve their inheritance vision and maximize the
intergenerational transfer of wealth," said Tina Di Vito, Director, Retirement
Strategies, BMO Financial Group. Di Vito also heads up the BMO Retirement
Institute, a think tank set up by the Bank to provide leading perspectives and
help make sense of retirement issues.
    Without consulting a financial advisor, you may not have properly
assessed your total wealth - including stocks, bonds, mutual funds, property,
businesses, and other important assets that would be available for
distribution or given adequate consideration to minimizing taxes due upon
death(2). As a result, heirs may find themselves responsible for settling a
hefty tax bill on the death of a loved one.
    "For example, an inheritance of an RRSP worth $250,000 could result in
taxes owing by the estate of up to $115,000 (assuming top marginal rate of
46%) which may be further reduced by probate, executor, trustee and legal
fees," said Di Vito. Therefore, communication with advance planning is key and
keeping your intentions a mystery until death can have negative consequences.
The lack of open conversation between generations can be a major contributing
factor to poor inheritance and estate planning. It may even lead to misgivings
and financial insecurity in retirement for family members."

    A little MORE conversation a little more action

    The survey also found that:

    -   80 per cent of Boomers and 77 per cent of seniors have not spoken
        with a financial advisor about what to do with their inheritance
    -   64 per cent of Boomers and 52% of seniors do not plan to talk to a
        financial advisor about their plan to leave an inheritance

    "More than ever before, Boomers and seniors are encouraged to seek
professional advice on topics that impact them financially - such as business
succession, retirement resources, long-term care options and estate planning
strategies. By having open intergenerational conversations about inheritance
and with the help of a professional advisor, Boomers and their families can be
empowered to make prudent decisions about their legacy plans," stressed Di

    About The BMO Retirement Institute

    The BMO Retirement Institute, launched in April 2008, provides thought
provoking insight and financial strategies for those either planning for or in
their retirement years. The Institute was launched to help pre-retirees
simplify the complex dynamic between personal finances, personal relationships
and retirement lifestyles. Contact the institute by email at or visit

    About the BMO Retirement Institute Study

    The study is based on a survey of 1,040 Canadians 45 years of age and
older, stratified by age, and conducted between May 20 and 28, 2009 using
EKOS' hybrid telephone-online Probit panel. Probit uses a random probability
technique to recruit respondents and employs an innovative dual mode telephone
and online methodology to ensure comprehensive coverage of households and
individuals who do not have access to the internet or are not regular internet
users. Data were weighted by age, gender and region using the most recent
Census data. Being based on random probability sampling, the results can be
considered accurate to within +/- 3.0 percentage points, 19 times out of 20.

    (1) The Canadian Inheritance Study, Decima Research, 2006
    (2) BMO Retirement Institute Inheritance Survey, Ekos Research, 2009

For further information:

For further information: Orli Namian, Toronto,,
(416) 867-4917; Lucie Gosselin, Montreal,, (514)
877-1101; Laurie Grant, Vancouver,, (604) 665-7596

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