Photo illustration by The Globe and Mail. Source: Getty Images
The beneficiary: “Linda” is a 65-year-old retired lobbyist in Vancouver who’s been married for more than 40 years. She maintains similarly solid relationships in her close-knit family, especially with her sister. Between them, they have four university-aged children, who are blessed with a 90-year-old grandmother who’s alive and well and very generous.
The inheritance: Upon her husband’s death 20 years ago, Linda’s mother – who with her husband came of age during the war, which prompted them to become keen savers – received a half a million dollars that she didn’t even know existed. While her mother is very self-sufficient in most ways, she doesn’t know much about handling money, so a financial planner in the family invested on her behalf in stocks to support her retirement. Proof that outsourcing tough tasks counts just as much as saving: “She actually invested wisely and did very well,” Linda says. Two decades later her mom is sitting on almost a million high-earning dollars – and paying hefty capital gains taxes on money she’ll almost certainly never spend.
What this consultant did with an inherited artwork that ended up being worth millions
What she learned: A few years ago, Linda took over the job of managing her mother’s finances. “Her biggest expense, by far, was taxes, of which she paid high rates, and any time she sold a stock, she had to claim it,” she says. Meanwhile, the better Linda did her job, the more her mother’s OAS got clawed back, and at some point, the whole endeavour began to feel like too much work that ultimately wasn’t worth it. “I started thinking there wasn’t any situation whatsoever in which she would ever need this much money,” Linda says. The money would be passed on eventually, she figured, so why not now? “Better a gift from a warm hand than a cold one,” she says.
Linda didn’t go directly to her mother, but instead to the family’s shared financial planner – whom she trusts completely. “I think financial planners in general tend to think the more money you have invested with them, the better,” she says. But not their financial planner, who agreed that beginning a process of gifting the money in advance was both appropriate and wise. “We planned to do this in careful increments in the hopes that by the time mom passes away, she’ll have money in her TFSA, but nothing else,” says Linda. If all goes well, she adds, “we won’t have to go through probate.”
What she did with it: Before doing anything at all, Linda’s family had many important conversations, repeatedly, to make sure everyone was on board. The most important party, of course, was her mom, and next was her sister. “She’s entitled to half of mom’s estate, so obviously nothing would happen without keeping her in the loop, and luckily we’re all very open and honest,” Linda says. She’s quick to admit their arrangement – currently done on the honour system and without any official paperwork – couldn’t work in many or perhaps most other families. Had her mother or sister objected to anything about the dispersal plan, notes Linda, no money would be dispersed at all.
Instead, her sister said the very opposite. “She didn’t want any of it, actually, and we both decided we were privileged enough and the money would be better used by the kids,” says Linda. Her mom agreed wholeheartedly, and the plan soon came into action: Every year, $100,000 was distributed equally among her four grandchildren. Some of them used it to pay their school tuition while others went back to school to train for new careers. Most put down payments on properties and one has found a new love of travel. “The money is worth so much more to them than it would be to us,” says Linda, who’s relieved that – so far at least – each has used their early inheritance well. Year one was considered an experiment they’d repeat if and only if all went smoothly, which it thankfully did.
Built into their dispersal plan is this big caveat: “We all agree that if their grandma ever needs the money back for any reason, we’re putting it right back into grandma,” Linda says. Even at 90, her mother is in a senior’s home, not a care home, because she doesn’t need extra help. If and when she ever does, financial or otherwise, grandma’s got a very grateful family ready and keen to repay her generosity.
Some details may be changed to protect the privacy of the person profiled. Have you recently received an inheritance and would like to participate in Inherited? Send us an e-mail.
