Life spans are increasing. Consider that in Canada over the last decade alone, life expectancy for those who reach 65 has climbed by two years, and men on average who are 65 today can expect to live to 84 and women to 87, while half of Canadians age 20 today will live to age 90 and 10% to age 100. Perhaps it is nature’s balancing act that there is a longer aging period but at the same time there also seems to be a longer maturation period for our children which impacts our estate planning.
One of the perplexing questions faced by parents in their estate planning is coming to grips with the question of deciding appropriate ages for their children to inherit. From my own perspective as an estate planning lawyer for over three decades, I have seen a significant shift in that time span to later ages.
When I first started practice at the age of 27, I recall the irony of trying to project with as much credibility that I could why the couple I was meeting with to take will instructions might wish to consider later ages, such as 25 or 30 than their often initial response of 21.
Over the years, those ages have tended to increase. I like to say that 30 is the new 25 and 35 is the new 30.
I encourage parents to look ahead to what is, or will be, their own children’s life experience as the relevant consideration, not their own life experience in arriving at their decision.
Times have changed. Young adults pursue more post-secondary education given our competitive economy and increased expectations from employers. They often do not enter the work force until their mid or late 20’s or even later. And when they do, they face a challenging job environment of first securing employment, and then trying to navigate a career path where this is often little job security.
Given the high cost of housing and life in general, they are living with their parents for longer periods than before or otherwise remain financially dependent, which can hinder financial maturity and independence. People are also pursuing more diverse life choices, including increasingly whether to have long-term relationships such as marriage and form families, and when they do, it is at later ages. Family responsibilities often force financial discipline and financial maturity out of necessity to look after the needs of a spouse and children that require support. But what is the rush – if we are all living longer anyway?
At the end of the day, there is of course no magic age at which to inherit. Age is only a number. A chosen age or ages is only an assumption that a child will be ready and prepared to handle an inheritance. Other factors include the size and complexity of what they inherit in determining whether they will be prepared. Inheriting a modest estate is far different than inheriting a substantial one with complex assets, such as a business where a higher level of preparedness is required.
Not all children are the same of course even within the same family. Parents often remark how different their children are in terms of spending and saving habits and financial acumen and ability even though raised in the same family environment. This makes decisions as to what are appropriate ages to inherit even more challenging. And when there are special needs children, the issue takes on an entirely new dimension with very different considerations.
The answer to the question at which age should children inherit requires careful consideration of many factors. As well, parents’ views can change as their children mature – sometimes to later ages than what they may have chosen when they were infants or minors.
The estate planning process is at the end of the day an organic one, and as children mature so often does our estate plan.