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Many Canadians could be in for a big inheritance, data suggests

Half of all households may get an inheritance of, on average, a quarter of a million dollars

Despite concerns of an impending retirement crisis, the Financial Post is reporting that many Canadians could find themselves in much better financial shape than they expected due to a large inheritance. The figures coincide with similar reports from the U.S. that show a massive generational transfer of wealth may be about to occur as the children of seniors begin to inherit their parents' property and assets.

Average inheritance of more than $250,000

The Financial Post looked at data from Statistics Canada that showed the aggregate net worth of senior households in Canada was $2.18 trillion in 2012. If that number is divided by the number of households headed by a person between 45 and 65, then the inheritance the 45 to 65 age group can expect to receive would be an average of $375,000 per household.

By using a different calculation that takes into account home ownership among seniors and the average house price, then the average inheritance for the 45 to 65 age group is still above $250,000. The Financial Post also points out that because assets will appreciate in value and because seniors tend to be better net-savers than their younger counterparts, it is unlikely that the projected size of that inheritance will diminish by much in the coming years.

Part of a larger trend

The Financial Post's figures reflect a much broader North American trend. As Forbes recently reported, the transfer of wealth that is projected to occur in the U.S. between generations over the next 50 years could be a staggering $59 trillion. Forbes notes that the figure is so high because, despite many Americans taking a financial hit during the Great Recession, older households were less affected by the economic downturn. Meanwhile, real household wealth has continued to rise compared with figures from the 1990s.

The data from both Canadian and U.S. sources suggests that many Canadians who will be entering retirement in the next couple of decades could be in much better financial shape than they expected. However, as the Financial Post points out, despite the prospect of a large windfall, people who inherit a large estate should refrain from splurging with their newfound money and should instead plan for the long term.

Dealing with an inheritance

While the prospect of a large inheritance will be a relief for many, it is important to realize that inheriting an estate is not always as simple as one would wish. After a loved one dies, surviving family members are more likely to be concerned about grieving than worrying about how to divide the deceased's estate. An experienced wills and estates lawyer can help with the division of an estate, including, if necessary, preparing a probate application. With the proper legal guidance, the executor of the estate can make sure that the estate is dealt with in the most appropriate way and the beneficiaries receive their inheritances without undue delay.

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