Should You Factor an Inheritance Into Your Financial Plan?

Should you plan around an inheritance?

A trillion dollars is currently changing hands in Canada. According to CPA Canada, that's roughly the value of wealth being transferred from the Baby Boomer generation to their children between 2023 and 2026 — one of the largest generational wealth transfers in Canadian history. A lot of that money has already moved. A lot more is on the way.

If you're in your thirties or forties and there's a reasonable chance an inheritance is somewhere in your future, the question becomes: should that change anything about how you're handling your money today? Should you save less, spend more, pay down debt more slowly, take on more risk because there's a backstop coming?

The short answer is no. The longer answer is more interesting.

What the data actually shows

According to a CIBC study, the average inheritance received by Canadians over the past decade was around $180,000. That's a meaningful number — definitely not nothing — but it's not life-changing money either. It's not lottery winnings.

A lot of that wealth is tied up in real estate, particularly in BC and Ontario where property values are heavily inflated. That creates a wrinkle, because real estate isn't liquid. Even parents who want to pass something along may not be able to until something forces a move — a downsize, a health event, or eventually their estate.

And then there's this: nearly half of Canadians still don't have a will. So a meaningful chunk of this wealth transfer is happening without clearly documented wishes, which makes things messier, slower, and more prone to family conflict than anyone expected.

The timing problem

Even if an inheritance is coming, the timing is almost never what people imagine. Canadians are living longer. The average life expectancy puts most parents into their mid-eighties or early nineties. If your parents live to 85 and you're in your thirties now, the math says you'll be in your early sixties when an inheritance arrives.

Sit with that for a second. By your early sixties, your mortgage should be paid off or close to it. Your kids should be done with school. Your retirement should largely be funded. If you've built a sound financial life, an inheritance arriving at 62 is a nice bonus — but it doesn't change your trajectory the way it would have at 35.

That's the trap. Counting on an inheritance to fix things later means deferring decisions you should be making now, while the impact would still be enormous. Money received at 35, when you might still have student loans, a mortgage, or a practice you're building, can be 10x as impactful as the same amount received at 60.

The other variables nobody plans for

Long-term care and healthcare costs can quickly erode an estate. Family dynamics shift — divorce, remarriage, estate plan changes. There's also the sandwiched generation issue: a lot of people supporting their own kids while also helping aging parents financially, which both reduces what eventually gets passed down and pressures their own retirement savings.

What people imagine they'll inherit and what actually arrives are often very different numbers.

What to do instead

The prudent approach is to factor an inheritance in but never build a plan around it. Build the financial life you want assuming nothing comes. If something does, treat it as a meaningful update to the plan, not the foundation of it.

The other thing worth doing — and this is the one most people skip — is having an actual conversation with your parents. Not about how much. About whether things are organised. Is there a will? Are estate documents in place? Is there a planner, an accountant, a lawyer involved? What are their wishes? Most people in their thirties and forties assume their parents have things handled. That assumption is wrong about half the time, and the cost of finding out at the wrong moment is enormous.

It's an awkward conversation. It also might be one of the most valuable conversations you ever have with them.

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