The disparity between the percentage of millennials in British Columbia expecting a large inheritance and of parents who plan on leaving one signals a need for a more transparent discussion on the topic of transferring wealth, suggests a report from Vancouver City Savings Credit Union (VanCity).
More than one-quarter (28%) of the province’s millennials are expecting an inheritance of more than $300,000, according to the Vancouver-based credit union’s report, entitled Great Expectations: Wealth Transfer Between Generations in British Columbia. However, only 8% of parents in the province believe they will leave $300,000 or more to their children while 66% state they will actually leave $100,000 or less to their children.
Millennials in metro Vancouver are likely to be even more disappointed as 39% stated they expect an inheritance of more than $300,000 while only 12% of parents anticipate they can leave that type of legacy behind.
Although many millennials are hoping to receive a sizeable legacy, it seems that an inheritance of $100,000 is a more realistic figure based on recent statistics. The average inheritance in B.C. in 2012 was $137,800 while the median was $50,200. This suggests that the vast majority of inheritances were less than $100,000, according to VanCity’s report.
There is also a lack of discussion within families about this topic. Less than one-third (31%) of millennials have discussed their inheritance with their parents while 47% of parents have had that discussion with their offspring.
The report indicates that a more open conversation regarding the transfer of wealth is important in order to ensure a parent’s legacy is handled well.
“Simply writing a will that provides for survivors isn’t enough to guarantee their future, and children need to be more engaged in the process, both as potential executors of their parents’ estates, and to dispel any unreasonable expectations they might have,” the report states.
“Preparation and transparency also reduces the potential for delays in distributing and challenges regarding estates,” the report continues.
Although many parents do not plan on leaving the large inheritance their children are expecting, 60% state they have already provided a portion of their wealth to their children by helping them pay off debt or helping them with a down payment for a house or a car.
Insights West conducted the online survey on behalf of VanCity between Jan. 22 and Jan. 27. The research is based on the responses of 403 adults within B.C. who are older than 65 and are parents to at least one child as well 401 millennials between the ages of 18 and 34 with at least one parent who is 65 years old or older.