Discussing inheritances with your children can be difficult – but it doesn’t have to be. According to the 2017 Wealth Transfer Report, published by RBC Wealth Management, one of the main reasons parents fail to discuss wealth transfer is because their own plan is unclear. Of the wealthy Canadian families surveyed for the Wealth Transfer Report, only 22% had a full wealth transfer plan in place. Understanding how to transfer wealth, having a plan to ensure your wishes are carried out and a strategy to transfer your assets tax- and time-efficiently can go a long way to helping you start a conversation about inheriting.

 

Educate your children early

 

According to the Wealth Transfer Report, parents believe that inheritors should start formal financial education at age 18. Yet, on average, individuals are 27 years old when they begin. The report also noted a clear correlation between starting financial education early and gaining greater financial confidence. As age brackets rise, financial confidence declines, from 66% confident for those who began structured financial education prior to 18, to 58% for those between 18 and 35, and only 41% for those who began after 55.

 

What should be discussed?

 

According to those that have received an inheritance, most were made aware of the value of their inheritance, but less than one third discussed other aspects of their inheritance, and only about 10% of beneficiaries received formal financial education. Despite the low level of discussion and education received, inheritors are clearly looking for advice. According to the Wealth Transfer Report, inheritors strongly value advice about carrying out their benefactor’s wishes, having someone to answer questions, support managing and making decisions with respect to the inheritance and help getting their own affairs in order.

 

Consider bringing in the professionals

 

For those who have received financial education, formal education from professional advisors was rated most valuable, at 80% effective. While family conversations were deemed least valuable, they were nonetheless rated 60% effective. While there are several ways to educate children about receiving an inheritance, starting with your own plan and adding a mix of family involvement, professional advice and real world learning can go a long way to helping your children make sound financial decisions when the time comes.