man holding dollar bills

Many people view inheritance as a gold ticket: it’s the key to paying off debt, travelling the word, and living a life of luxury. Many Millennials have been suffering through a prolonged period of economic hardship since the great recession in 2008. The supposed “wealth transfer” might (hopefully) mitigate some of that financial blowback. An inheritance can change the person’s life for the better, if the money is blown on stuff they don’t need. Even a small amount of money is life changing in this day and age. If you’re lucky enough to inherit a small fortune, don’t blow that money. Besides doing the responsible thing and paying off your debts and mortgage, you can use it to have fun AND spread it around to your community.

Let’s delve into the ways inheritance can be used as a widespread force for good:

Legacy

Social Changes

Humanitarian Aid

Startups

Guardian of the Sydney Harbour





Building a Legacy of Education

Leaving a legacy is important for many people. Regardless of an inheritance or not, many people do want to give back to their community. Many people choose to leave money for schools and hospitals. Some people have given back by donating to their local school system, either because they really believe in the importance of education, or they had a good experience at their former alma mater, or both. The people who inherit and choose to do good with their money aren’t just leaving behind a legacy in the field of education, they’re changing other aspects of society as well:

Catalyzing Social Change

Many wealthy people often leave money to charities or foundations in the form of philanthropy. There are a variety of causes to support and charities always need money. Philanthropy can ease the burden and leave a legacy behind for your heirs. There are some billionaires, for instance, who have promised to donate their entire fortunes when they pass away.

Humanitarian Aid Efforts

An inheritance can also bolster humanitarian aid efforts in other parts of the world. An inheritance can go to worthwhile causes, such as Doctors without Borders, provide support for organizations around the world, and much more.

Empowering Entrepreneurship and Innovation

There are always startups looking for seed money: startups offer new innovative ways to offer products that can change people’s lives for the better. Supporting these startups can lead to supporting something brand new and innovative.

Guardian of the Sydney Harbour

This brings us to Australian native Andy Orr: the 55 year-old former school teacher inherited enough money to leave his job and dedicate his time to something he truly passionate about: sweeping up the Sydney Harbour. Every morning, Orr leaves his house with his trusty hat, bucket, and gloves in tow. He spends each morning picking out the plastic litter that sweeps across the harbour. He came up with the idea while strolling along the harbour with his wife a decade ago. He began cleaning up the plastic debris in his spare time.

The inheritance he received in 2020 has allowed him to quit his job and pick up trash full-time.

The most common piece of garbage that he often finds? Plastic straws. Reflecting on the activity, Orr says that picking up litter full-time is a “meditative” process. He finds it calming.

What happens when the 55 year-old’s knees give away? Orr says he’ll continue his work from a boat.

You might argue that Orr is only making a small impact on the world; but he’s doing what he loves and his inheritance has freed him of any financial restraints. He’s doing good in the world. Will you do good in the world as well?

Inheritance can make a meaningful difference in the world.

Man Excited by Windfall

Imagine that you have inherited a cool $50 million. What do you do with it? Before you go blowing it all on a fancy cruise vacation, new house, BMW, new car, or yes, avocado toast, take some time to collect your thoughts and let the fact that you’ve inherited a fortune sink in. That’s what Ken from Sacramento did. After inheriting $50 million dollars from his parents, he called into the Dave Ramsey show to gain some perspective on how to manage his money. You can learn from Ken on what to do if you ever wind up in the same situation. Here are a few tips on managing inheritance that we’d like to share:

Stay calm and don’t be in a rush to spend your money

See professional advice

Set clear financial goals

Pay off debts and pad your emergency fund

Invest your money wisely

Don’t blow it all

Giving back

1. Take a Breath and Don’t Rush

This one should be obvious: don’t rush to blow it all. When Ken reached out to the Dave Ramsey show about how to spend his $50 million dollar inheritance, Ramsey offered the following advice: spend some, save some, invest some, give some of the money to charity, etc. The news of an unexpected inheritance can be overwhelming, triggering a flurry of emotions. Try to adjust to your new financial reality before making any rash decisions.

2. Seek Professional Advice

One of the first things you may want to do is to seek out professional advice from a financial advisor. While Ken Consider consulting with a financial advisor, accountant, or lawyer who specializes in inheritance matters. That is why the caller called into the Dave Ramsey show: to receive advice from a professional on what to do with his inheritance. A financial advisor can help you grasp the full picture of dealing with taxes, investments, any fees, bills to pay off, debts, etc. An advisor can offer the best strategies for managing or investing your assets. A financial advisor may also help you tackle paying for everything in this era of high inflation. You may want to consult with an advisor you are really comfortable with, and who you have a good relationship with. You don’t want to stick with the SAME advisor just because that particular person is someone who your parents used (IF your parents had one).

3. Set Clear Goals

Once you’ve gathered the necessary information, it’s time to set clear goals for what you want to achieve with your inheritance. You may want to look at paying everything off you owe before deciding to (wisely) use the money to invest, renovate your house, travel, etc. Specific goals are the key: whether it be diversifying your portfolio, or planning your estate.

4. Pay Off Debts and Build Emergency Fund

This one goes without saying: If you have any outstanding debts (student loans, credit card debt, etc.), consider using a portion of your inheritance to pay them off. Even if you comb through your finances with a financial advisor, you still shouldn’t touch that money and just brazenly spend it all. When you pay off your all of your debts, you can relax and focus on investing for the future. It’s a practical way to secure your financial future and relieve the burden of debt. It’s also good to prioritize an building up an emergency fund to cover unexpected expenses. You don’t have to have a specific amount between three to six months of savings, but if you have an inheritance and are looking to save for the future, it’s always wise to do following: pay off debt and have an emergency fund. It sounds obvious, but when you actually have access to the money, it’s tempting to simply blow it all. You might also underestimate how much money you really need to live on and invest for your future.

5. Invest Wisely

Consider diversifying your inheritance into investments to mitigate risks and maximize returns. Consult with a financial advisor to develop an investment strategy. Whether you invest in stocks, bonds, real estate, or put money into mutual funds, TFSAs, or RRSPs, make informed decisions.

6. Plan for the Future

Once you have used that money to plan for YOUR future and invest wisely, you may also want to spread the wealth (to your family members and loved ones, that is). You may want to use some of that inheritance to fund your children’s education. You may not have a million to your name, but estate planning is always valuable. Take the time to create or update your estate plan, including Wills, trusts, and beneficiaries. Planning ahead ensures that your assets are distributed.

7. Enjoy Responsibly

It sounds like a beer slogan, but it’s true: enjoy your money responsibly. Treat yourself to something special, but avoid overspending or making impulsive decisions that could deplete your inheritance. Stories abound about lottery winners who blow through their money within a decade and wind up broke. If you’re not careful, the same could happen to you, regardless of how you come across your windfall (i.e. lottery or inheritance).

8. Give Back

Lastly, many people who have their Wills drawn up often consider leaving something for charity. Many people do this in their Wills, but if you ever come across a significant windfall, you may want to consider donating the money right away. That money you donate will surely have a meaningful impact on others around you.

Whether you inherit a million, or a small windfall, just be sure to manage it carefully.

Be sure to seek out advice, like Ken from Sacramento.

A fistful of money

Inheritance: everyone dreams of inheriting oodles of money from a rich aunt or uncle. But what happens when you actually get the money? It might not be everything you wish for.

Marlene Engelhorn is exactly in that position: she inherited a whopping $36.6 million dollar (in Canadian dollars) from her rich grandmother. She should be set for life, right?

Instead, the wealthy heiress is quite unhappy with the princely sum of money.

Inheriting the money was bittersweet for Engelhorn; it’s enough to live on for the rest of her life, but it left the heiress with a nagging feeling in the back of her mind. Engelhorn felt conflicted: “I am only wealthy because I was born in a rich family. And I think in a democratic society of the 21st century, birth should not be the one thing that determines whether or not you’re gonna get to lead a very good life,” Engelhorn was reported as saying.

Engelhorn began a campaign for heavier taxes on the wealthy in Austria; this included campaigning for an inheritance tax. Her pleas to the Austrian government fell on deaf ears; the tax inheritance laws that Engelhorn was hoping for didn’t come to fruition. She has therefore decided to spearhead a grass-roots campaign for heavier taxes to be levied against the wealthy in Austria.

Partnering with the Foresight Institute in Austria, Engelhorn is looking to have a committee of Austrian residents tackle economy inequality by redistributing the €25 million ($36.6 million Cdn) she is generously giving the committee to play with.

How does this work?

Engelhorn and the Foresight Institute invited 10,000 Austrian residents over the age of 16. The number will be whittled down to a lucky 50 residents, who will be randomly selected to form the “Good Council.” These members will decide (over a period of six weekends) as to how the money will be spent.

Engelhorn also continues to work with charitable groups, like Millionaires for Humanity and Tax Me Now.

She continues to lament that “the Austrian system shouldn’t allow her to accumulate so much wealth.” But without any inheritances taxes in sight, Engelhorn is left to her own devices to distribute her own wealth.

Until that changes, Engelhorn plans to give away most of her inheritance.

You can read more, here.

Dog bounding up in the air

Pet care: our furbabys are spoiled. It’s not uncommon for people to spoil their furbabys; Instagram and other social media is littered with videos and pictures of people playing with their beloved Fidos and felines, pampering them, feeding them, and just enjoying their presence. (In fact, pets sometimes get receive better care than other humans.)

Is it any surprise that people want their pets to be taken care of when they die?

There are some people who love their dogs, cat (and by extension, birds and rabbits) more than anything in the world, and have a closer relationship with them over their human counterparts (we’ll get to some real-life examples later.) It’s an increasingly popular trend: leaving behind money and assets for the care of their non-human loved ones. It’s not so far fetched when you consider how much people pamper their dogs and cats already – in fact, it’s a testament to the deep bond people share with their furry companions.

The History of Pet Inheritances

Reasons for this increasing trend

Legal Considerations

Challenges

History of Pet Inheritances

The concept of leaving money or assets to pets isn’t entirely new. In fact, it dates back centuries. Roman Emperor Gaius Caligula, for instance, left behind a substantial inheritance for his beloved horse, Incitatus. His horse was gifted with a complete with a marble stable, fine fodder, and a staff of servants (no word on how long the horse lived after his passing.) Then, there are the myriad of modern day stories: Leona Helmsley, for instance. And the late Karl Lagerfeld has a cat worth over $3 million dollars. The trend has gained momentum in recent years, with many pet owners treating their pets better than their human family members.

Reasons for the Trend

Several factors contribute to the rising popularity of leaving inheritances to pets:

1. Pets are like family (and are treated as such): Pets are often cherished as family members rather than animals (at least for dogs and cats, anyway.) This gives pets a status deserving of consideration in planning for their estate.

2. Concern for Their Well-being: Leaving a financial legacy to their pets ensures that they receive the care and attention they deserve, even in their owner’s absence.

3. No Heirs: People who are either childless or don’t have family members, people keep dogs or cats for company. They become as close to their owners as family. Leaving behind something to take care of their pets is a natural choice.

4. The Growth of Pet-Related Services: The pet industry has exploded in recent years, from pet spas, gourmet pet food, to pet therapists and luxury accommodations. With these services readily available, leaving an inheritance to pets becomes more feasible and practical. It really shows how much people love their pets and would do anything to take care of them.

While the idea of leaving inheritances to pets may be heartwarming, there are legal and practical aspects of these types of arrangements. In many provinces/territories, pets are legally regarded as property rather than as beneficiaries, which can make direct bequests challenging. To be fair, how would you directly pass on wealth to a pet? You would need someone else to look after the pet in question for you. Instead of inserting your wishes into a Will, you might want to look into a Pet Will, which allows you to comprehensively provide details for pet care after your passing.

A Pet Will allows you to legally set aside funds specifically for their pets’ care and designate a trustee responsible for managing the assets on behalf of the pets. Caregivers ensure that the pets receive the necessary care, and detailed instructions cover everything from food to medicine. It also includes any special instructions the pets might require for care.

Challenges and Controversies

Leaving inheritances to a dog or a cat is well-intentioned, but this process has it’s obvious challenges: some family members may dispute these arrangements in court, arguing that the funds should be allocated for human beneficiaries (this was the case for Leona Helmsley), rather than to pet care. There is also the sobering concern people have for their pets: will caregivers maintain care for the pets in question, or just run off with the money they were provided with for the pet’s care? Make sure ALL of your loved ones are taken care, with the right estate planning!