Consider the timing of leaving an inheritance

Kemdi Ikejiani - May 18, 2024
You may automatically decide to leave an inheritance for your loved ones in your will. However, you might have reason to consider gifting the funds earlier—or even later.

Naming a beneficiary in a will may be seen as the most common way to leave an inheritance to a loved one.

However, in certain situations, many people choose to give an advance on an inheritance during their lifetime or have the funds distributed in the years following their passing.

Giving while living

Our increasing longevity can have a significant effect on the decision to leave an inheritance through a will. When the beneficiary is a child, they may already be well established and financially secure—even retired—when they receive the funds. Giving an earlier inheritance during your lifetime could make a greater difference to a loved one’s quality of life. Just one example is gifting the funds for a child or grandchild to make the down payment on a home.

Delaying an inheritance

Some individuals want to control how an inheritance is received, typically by establishing a trust. One person might choose a future year for the inheritance to be received if they’re concerned that a large inheritance going to a young beneficiary will weaken their child’s work ethic. Another individual may arrange for the inheritance to be paid out in instalments over a specified period if they’re concerned about the beneficiary’s ability to manage a large sum.

Making your decision

Although the reasons to give an inheritance earlier or later may be valid, it’s still a decision that should be weighed carefully. If you plan to delay an inheritance, think about the consequences. For example, consider whether a child who receives their inheritance in instalments will feel resentful, especially if their sibling receives their total inheritance upon your passing. If you’re thinking about giving an early inheritance, talk to us. We can determine whether it will or will not jeopardize the funding of your retirement, including any unexpected costs.