When it comes to uncomfortable conversations, matters of inheritance may be near the top of the list.
But as the cost of living rises and the generational wage gap grows wider, experts say it is now more important than ever to open up that dialogue.
Given the current economic climate, it's harder for young people to get ahead without some sort of help, said Ron Haik, wealth advisor and client relationship manager at Nicola Wealth Management Ltd.
"Income growth has not kept up with the housing inflation," he said, adding that parents have historically tried to help their children out in terms of buying their first home but the need now "has never been greater."
"It's important to understand that those in their 50s and up have benefited from 15 years of low interest rates, coupled with significant asset appreciation, including their home equities, their wealth has gone up tremendously in the last 15 years."
A recent survey commissioned on behalf of Willful, an online will company, found that there's a decent gap between how many Canadian parents plan to leave an inheritance (87 per cent) and how many children are expecting to receive one (62 per cent).
This lack of communication can lead to family members not knowing how an inheritance process will play out, Erin Bury, the CEO of Willful, said. She warned that important questions may never get asked, such as if children will be added as a joint owner on a home to avoid taxes, if there will be a life insurance policy and if children will just be left assets in a will.
Despite the lack of conversations on the topic, data from the survey suggests children are still planning their future around receiving some type of inheritance.
Notably, 22 per cent of Generation Z, 14 per cent of millennials and 21 per cent of Gen X plan to fund at least some of their financial future using an inheritance. When it comes to baby boomers, 11 per cent said they plan to fund their future with an inheritance.
Haik said that Canada will see a large intergenerational wealth transfer in the next 30 years, much of which will come from equity that's unlocked in family members' homes.
He encourages young people to spark a dialogue with their parents about an inheritance or an early inheritance -- such as a gift to put a down payment on a home -- if it makes sense within that family's culture and the parents are in a position to do so.
Haik said he has conversations with his own clients who are in their 50s and older to see if they might find it beneficial to give an early inheritance. But, only if it doesn't impose on their financial stability and independence through retirement.
His reasoning? Now may be the time that children need the money the most, particularly those who have not been given the same financial opportunities as their parents.
A natural time to spark a conversation around end-of-life planning or early inheritances is during major life events, Haik said. For instance, if you're thinking of buying your first home, you could ask if there might be a contribution coming that you could add to your budget but, Haik added, clarify that it's not expected.
Another time to bring up the topic is if you're creating your own will, he said. You might ask if your parents have created one and what their end-of-life plans are.
It's important to note that not all families have the means to provide an inheritance. In the survey, high income households (earning $100,000 or more) are nearly twice as likely as modest income households (earning less than $50,000) to plan to use an inheritance to fund at least some of their future goals, suggesting that a level of generational wealth is already at play.
And, in some families, wealth distribution goes both ways. Children who have had more opportunities to earn higher incomes and grow wealth may be planning to help fund their parents' retirement instead of receiving financial support from them.
While Haik recognizes the important of starting the dialogue, he encourages anyone having the conversation to not take anything for granted.
"If you're counting on a white knight to come and save you, then you're not going to be standing on your own two feet in terms of planning ahead," he said.
"You're going to be spending rather than saving."
This report by The Canadian Press was first published Sept. 27, 2022.
