Illustration by Photo illustration by The Globe and Mail. Source images: Getty Images
The beneficiary: “Gabby” is a 68-year-old grandma living in a mid-sized Ontario city. A never-married single mother, Gabby has worked in many fields and “worn many, many hats” over the years before finally retiring. “The same day I pulled the plug at work, my daughter went into labour with my first grandkid,” she said. Her daughter, son-in-law and their child all live nearby.
The inheritance: In 1998, Gabby and her teenage daughter were living with Gabby’s partner of the time. “It was a very unhappy and toxic relationship,” Gabby recalled, though like many before her, she didn’t have the financial footing to pack up and leave. But when her father, who had Alzheimer’s and was living in a home, passed away, his house was sold and divided equally between four siblings. Gabby got about $25,000 – equivalent to about $50,000 today – her obvious ticket out of a bad situation and just in time.
What she did with it: Had Gabby inherited that money at 20 rather than 40, she probably wouldn’t have used it so wisely. “I didn’t even think for a minute about spending it on a vacation or a fancy new car,” she said. “After a few not-good living situations, I wasn’t about to waste this opportunity. I swore I’d have my own home where nobody could put me out or treat me badly.”
Topped up just a bit up with Gabby’s small savings account, the $25,000 became the 10-per-cent down payment on her dream home, a charming, war-era 1½-storey house found by a friend who worked in real estate. “As soon as we turned down the street, before I even saw the house, I knew this would be our home,” Gabby recalled. They moved in just as her daughter began high school and Gabby turned 40 – the same age her daughter is now.
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What she learned: Almost 28 years later, Gabby is now writing her own will, and a single, financially responsible child is making the process delightfully easy. “I have full trust in her and I think I instilled some good scruples,” said Gabby, who’ll be passing along her money without stipulations. “I don’t feel that I know any better than her, and the world’s changing so fast that we all have to juggle and make changes.” One of those changes, since Gabby’s got some health issues, are her (pretty expensive) plans to move into a retirement home.
Gabby and her daughter communicate well and are very open about money – now. “It’s certainly not her favourite thing to talk about, but when I got sick and had to have surgery, I told her we had to have the talk.” They went through all the basics like you’re supposed to – location of the will, contacts for lawyers and financial advisers, intentions and end-of-life planning – and compared worries and concerns. “She doesn’t want me to worry about living life less so that she can have more,” Gabby explained. “Plus, it takes the strain off her. She doesn’t have to worry about looking after me.”
That works both ways. Gabby’s daughter and her husband make a good living and will be fine financially even if Gabby were to spend every cent. “They have a wonderful, healthy relationship as I see it. But I know anything can happen and things can change.” While she wasn’t able to have this particularly awkward conversation with her daughter, Gabby wants to make sure that any money she bequeaths her daughter is all hers. If her daughter ever finds herself in a situation like Gabby’s in 1998, she wants the inheritance to protect her daughter the same way her inheritance once did.
Luckily, Canadian family law is already operating in Gabby’s favour. While (prenupless) separating spouses are each entitled to half the net family property accumulated after the marriage, inheritances are kept separate – most of the time. Should Gabby’s daughter use the money to buy a house, the property is a shared marital asset. And if she puts it into a joint bank account or uses it to pay off joint debts, consider that money gone. If Gabby would really want the money to go to her daughter alone, best to establish a trust and name her daughter the sole beneficiary. And except for her lawyer, no need to tell anyone at all.
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