My name is Mark Goodfield. Welcome to The Blunt Bean Counter ™, a blog that shares my thoughts on income taxes, finance and the psychology of money. I am a Chartered Professional Accountant and a partner with a National Accounting Firm in Toronto. This blog is meant for everyone, but in particular for high net worth individuals and owners of private corporations. The views and opinions expressed in this blog are written solely in my personal capacity and cannot be attributed to the accounting firm with which I am affiliated. My posts are blunt, opinionated and even have a twist of humor/sarcasm. You've been warned.

Monday, November 14, 2016

The Nest

In February, 2012, I wrote on the taboo topic of whether it is morbid or realistic to plan for an inheritance. In the blog post, I noted that I had observed over my career, a couple people living beyond their current means, on the assumption they would inherit money at a later date. Their future inheritance would be the fix for their current overspending and excessive debt.

In the circumstances I witnessed, the inheritances were actually received as hoped for/expected by the children when their parents passed away. I noted in the post that I had yet to observe a circumstance where a planned inheritance had been less than what the beneficiaries expected and that is still the case to date.

Thus, when searching for a book to read last summer, I was intrigued when I saw The Nest, by Cynthia D’Aprix Sweeney on The New York Times Best Sellers List. The Times described the book as “Set in New York, The Nest features four neurotic siblings who are squabbling over their inheritance and struggling with the disappointments of middle age. Their joint trust fund, which they call “the nest,” is jeopardized when Leo, the hard-partying black sheep of the family, gets in a drunken-driving accident with a teenage waitress in the passenger seat”.

While the book may not be one of my all-time favourites, this satire about the dysfunctional Plumb family was definitely an entertaining read. More Magazine said this about the book “Few things are more compelling than looking into the interiors of other people’s lives-and finding a truth or two about our own. In Cynthia D’Aprix Sweeney’s wickedly funny novel THE NEST, four midlife siblings squabble over their inheritance; universal questions about love, trust, ambition, and rivalry roil.”

As I do not want to give away too much about the book should you decide to read it, I will just note a few of the interesting concepts Ms. D’Aprix highlights:

1. How a known inheritance can impact current day living.

2. How future plans are premised on the known inheritance.

3. The desperation that ensues when a planned inheritance is jeopardized.

4. How family dynamics can be improved or worsened through the process.

5. Money is not everything.

Retrospective


In my "morbid or realistic" blog post I had the following conclusion:

“Is it morbid to plan for an inheritance? Clearly, it is. Would most people rather have their parents instead of the inheritance? Yes. This topic is a very touchy subject and an extremely slippery slope, but to ignore the existence of a significant future inheritance that would impact your personal financial situation may be nonsensical. However, if your financial planning takes into account a future inheritance, you should ensure you have discounted that amount to cover the various risks and variable that could curtail your inheritance and be extremely conservative in your planning”.

I still feel that in situations where there is a high certainty of an inheritance (significant family assets, strong family bonds, etc.) it is nonsensical to ignore the inheritance in your planning.

However, in other less certain cases, I think Preet Banerjee (whom I quote in the postscript) has it right. He says "There are enough variables affecting your own financial success. Ideally, you shouldn’t bank on an inheritance in your financial plan, but rather treat it as an unexpected windfall”.

This site provides general information on various tax issues and other matters. The information is not intended to constitute professional advice and may not be appropriate for a specific individual or fact situation. It is written by the author solely in their personal capacity and cannot be attributed to the accounting firm with which they are affiliated. It is not intended to constitute professional advice, and neither the author nor the firm with which the author is associated shall accept any liability in respect of any reliance on the information contained herein. Readers should always consult with their professional advisors in respect of their particular situation.