Losing your job can be one of life’s toughest setbacks. Navigating it with clarity requires taking time to process your emotions, understand your legal rights and seek professional advice — key steps to getting your career and finances back on track, experts say.

Like mourning a death, getting laid off can drag you through the classic stages of grief: denial, anger, bargaining, depression and acceptance. The loss of your job means not only a loss of income, but also workplace friendships, identity and purpose.

“People don’t always equate grieving with job loss,” said Farah Kotadia, founder of Wellness Works Counselling in Vancouver.

“By sitting with our grief, we’re actually reflecting as well, and we’re thinking about our next steps … so take the time to grieve.”

If you miss certain co-workers, Kotadia suggests reaching out. “In a job, there’s always pieces that we like and pieces that we don’t like, so what resonated with you? Where does passion come in?” she said.

Grief in the context of job loss could take a couple of weeks, a few months or even a year to process, Kotadia said. One day, you may feel hopeful sending out five job applications with cover letters; the next day, you may not want to get out of bed.

“That’s OK. That’s normal. That will happen,” she said.

While emotions can run high immediately following a layoff, employment lawyers advise against acting on them.

“I don’t want people to take this opportunity to tell their bosses everything they hate about them or bad-mouth the company to others,” said Lior Samfiru, national co-managing partner at Samfiru Tumarkin LLP.

“All of those things could bring legal action against the individual, but equally as important, may make it that much more difficult in resolving a severance issue.”

Samfiru said individuals and employers alike often misunderstand provincial employment standards, which commonly require workers to be paid one week of salary per year of employment.

But those standards are just a minimum.

After considering your age, tenure with the company, industry, medical conditions and the current unemployment rate, severance could be 10 to 20 times higher than what’s outlined in employment standards, Samfiru said. That’s why any documentation providing a holistic view of your income — such as your employment agreement, bonus plans or commission payouts — is key to estimating your severance entitlement.

Samfiru, whose firm’s website has an online severance pay calculator, advises getting legal advice when faced with job loss, as 90% of severance packages initially offered by companies are “inadequate.”

He said he’s worked with clients offered one month of severance when they were entitled to six.

“Those are the gaps we see. They’re significant,” he said.

Severance offers also come with a deadline for acceptance, but Samfiru calls this a common “pressure tactic” used by employers.

“Your legal rights don’t expire on Friday at five,” he said. “In fact, you have two years.”

Value of professional financial advice

It doesn’t hurt to seek professional financial advice, too. Andrea Andersen, a Calgary-based certified financial planner at Edward Jones, encourages this, especially among younger workers.

“Millennials tend to want to be more independent. They want to be self-directed investors,” she said. “But it’s these times where it’s important that you start building a relationship with (an advisor) who can help direct you.”

If you have monthly car payments or credit card debt, for example, Andersen said an adviser can help you present a game plan for the bank on how to meet those obligations.

Advisors may recommend halting RRSP contributions temporarily to improve your cash flow or structuring your severance in a tax-efficient way.

For example, you may want to defer receiving your severance to a low-income-earning year or roll over your severance into your RRSP to avoid paying tax in the current year.

“Usually, it takes a lawyer to broker these types of arrangements, as neither employee nor employer tend to think about it,” Samfiru said.

While a job loss can leave you feeling financially vulnerable, Andersen and Samfiru agree the benefits of seeking professional advice outweigh the costs. Legal fees are tax deductible if they’re incurred for the purpose of collecting wages. Often, the final severance settlement will include compensation for legal fees on top of the severance amount, Samfiru said.

He also recommends applying for EI immediately.

“While you cannot get EI and severance for the same period, EI can kick back in if the severance runs out and you’re still unemployed,” he said.

Andersen, who also has experience in resilience training, highlights three traits that may help you get out of a post-layoff rut: being positive, having a sense of control and having a support group.

She advises defining small, achievable financial goals and building specific expectations for your next role.

“When you know what you’re looking for, when you have your reason why, then the motivation will be easier,” she said.

When any service is offered for free, it’s good to know why.

In the booming market of buy now, pay later (BNPL) financing, those opting in generally get to spread payments over a number of weeks at no cost, because merchants pay for the service in the hopes it will convince consumers to spend more.

That’s certainly the promise providers like Affirm and Klarna advertise to businesses, touting a near 20% boost to order totals, while Shopify says its instalment program can lead to up to a 50% boost in average order value, plus up to 28% fewer abandoned carts.

While the option can add convenience at possibly no direct cost to consumers, financial experts warn it’s far from risk-free.

“The temptation is very great to overspend,” said insolvency trustee Doug Hoyes.

With the option popping up during online checkout or being offered by a cashier, consumers are also not necessarily fully thinking through the decision and the implications of what they’re agreeing to, Hoyes said.

“For the vast majority of people, you are taking on debt without really realizing it. You’re not making a conscious decision that yes, I will borrow that money. And that’s dangerous, obviously.”

Credit score implications and evolving reporting practices

While most buyers pay off those debts — which tend to run in the hundreds of dollars rather than the thousands — there’s also a rising push to have the data shared with credit-reporting agencies, creating new areas of risk.

Last week in the U.S., reporting giant FICO said it was launching its first credit scores that incorporate BNPL data.

And in April, Affirm said it would start sharing data with TransUnion in the U.S., with a goal to do so in Canada as well, said spokesman Brian Levin.

“We believe that reporting to credit agencies supports responsible lending and promotes positive credit outcomes,” he said.

In Canada, Equifax said its credit reports have started to include data from some BNPL lenders, which may be used in the calculation of credit scores.

TransUnion said it’s still in the development stage of figuring out how to integrate BNPL data, including creating a separate section on credit reports to reflect the unique nature of these products, said spokeswoman Hyunjoo Kim.

While work progresses to add BNPL to credit reporting, some providers have raised concerns.

Klarna said in March 2023 that it wasn’t sharing data with U.S. credit-reporting agencies because BNPL doesn’t fit in well with other types of loans.

The company, which confirmed it doesn’t share data with Canadian agencies either, said adding BNPL to existing credit-reporting models could leave consumers worse off.

“As there is little clarity on the potential long-term impacts to the consumer, we believe this approach is too risky,” the company said.

Other providers, like Afterpay, also say they don’t provide any data to credit-reporting agencies. Sezzle said sharing data with ratings agencies is an option for those who choose its Sezzle Up program to build their credit.

The varying approaches to credit reporting are also a reminder of the variety of other subtle policy differences between providers that consumers should consider before signing up.

Some, like Klarna, charge a small late fee and send unpaid debts to collection agencies, while others, like Affirm and Afterpay, lean more on halting further purchases until older bills are paid.

Most providers are also increasingly offering longer-term loans, with rates ranging from zero interest into the 30% range. Some are striking partnerships for bigger-ticket items like exercise equipment and flights, making for a potentially risky transition to higher debt loads.

The risk of stacking and managing multiple loans

Just the fact that there are so many providers also raises the risk of stacking them and having to keep track of multiple accounts of debt, said Natasha Macmillan, Ratehub.ca’s head of everyday banking.

“Because of the zero-interest appeal, it almost gives people a false sense of affordability,” she said.

“The real caution I would provide is ensuring that, if you do have one, or multiple, you’re looking at the total cost of all of the buy now, pay later programs that you have ongoing, to ensure that you can actually cover the cost of each of them.”

The strain of those cheap loans is starting to show for some providers. Klarna’s most recent quarterly results showed a 17% increase in consumer credit losses, and its overall losses doubled, raising concerns it could be the start of wider industry trouble.

But the company’s credit loss rate was still only 0.54%, showing the vast majority of borrowers are still repaying their debts.

The bigger question is whether consumers are spending more than they meant to — and if money they had planned to put elsewhere is now going toward paying back those purchases.

To avoid a pile of unexpected bills, Hoyes said the key when shopping is to think ahead.

“There’s nothing wrong with using a credit card or buy now, pay later or a car loan or a mortgage or anything like that. It’s when you don’t have a plan — when it becomes an impulse purchase when you’re standing at the store — that’s when you can get into a bit of trouble.”

It’s a comment sometimes heard by Julia Chung, an advice-only financial planner at Spring Planning in Vancouver.

Her retort: “It isn’t about you. It’s about the people that you leave behind.”

Having a well-thought-out estate plan is “one of the most loving things you can do for your friends and family,” Chung says.

And it goes far beyond drawing up a will laying out who gets what when you’re six feet under.

Chung says there’s also planning that must be done for when you’re still among the living, but may have lost the ability to make your own decisions due to dementia or other conditions.

People are living longer thanks to advances in science, “but not all of us are going to live really well,” Chung says.

A power of attorney is set out in a document entirely separate from a will and doesn’t automatically default to a spouse or adult child.

There are also financial assets that fall outside a person’s will that need to be sorted out — like beneficiary designations for life insurance, RRSPs and TFSAs.

The last thing a bereaved loved one wants to do is go on a wild-goose chase for the information they need to tie up financial loose ends, so some of Chung’s clients put together a binder with key information.

“What information do they need? Just having a will isn’t going to tell them where you bank or how to access your mail or who your investment adviser is,” says Chung.

“So how do we get that information to them?”

Another aspect to think through is how and when any minor children left behind can access their inheritance.

Chung recommends structuring a trust so a young person gets the funds in staggered amounts, not in one big lump sum.

“As I always say to my clients when I see this, ‘Think back to when you were 18 or 19. Were you making really smart financial decisions? Because I wasn’t,'” she says.

Last month, IG Wealth Management released its annual estate planning study, which suggested 54% of Canadians lack a plan.

Twenty-nine per cent of respondents said their reason for not having an estate plan was a perceived lack of wealth.

“Ironically, I think that in many cases, it’s the people who don’t have sufficient wealth yet that need to think about estate planning the most, especially if they have dependents,” said Christine Van Cauwenberghe, IG’s head of financial planning in Winnipeg.

Forty per cent of respondents reported having legal documents in place to safeguard their finances should they be diagnosed with cognitive decline.

The survey was conducted online by Pollara Strategic Insights, polling 1,017 adult Canadians between April 10 and 21. The polling industry’s professional body, the Canadian Research Insights Council, says online surveys cannot be assigned a margin of error because they do not randomly sample the population.

Van Cauwenberghe says estate planning can be more complicated in blended families. For instance, it could be all well and good for someone to designate a partner as a direct beneficiary for a life insurance policy.

But if that partner passes away, children from a previous relationship may be “completely disinherited,” she says.

“It’s usually inadvertent, but it’s just due to a lack of planning.”

Another item to check off the to-do list is to choose who can serve as executor of your estate, power of attorney and guardian to minor children.

It’s not necessarily best to have the same person do each job, and it may not make sense to appoint someone close to you.

“I think sometimes people choose their executor because they think that person will be offended if you don’t choose them. That person would probably be relieved not to be chosen,” says Van Cauwenberghe, adding corporate trustees are an option when there’s no one willing or able to take on the tasks.

“It’s a big job, and understand that most people don’t have any experience in it. They don’t know what to do, they delay, they make mistakes, they don’t reach out to the right experts and it can be very stressful.”

Van Cauwenberghe says it can be tough to put these difficult decisions at the top of the priority list.

“If you never set aside the time, it’s never gonna happen,” she says.

“But you’re not going to be the one to pay the price. It will be your loved ones who will pay the price for your lack of planning.”

Sibling relationships can be complicated already — after a messy inheritance, they can get worse.

Josh Sheluk’s best advice to parents is to make their estate plans simple and transparent, and to communicate them clearly. But that’s an ideal scenario and not necessarily the norm, said the portfolio manager for Verecan Capital Management.

“Let me start with saying this: roughly half of adults in North America don’t have a will,” Sheluk said. “Of the half that do have a will, I’d say there’s probably a roughly even split between ones that go very, very well, and ones that have some complications or issues associated with them.

“There are often, way too often, surprises along the way or complications that arise,” he added.

Since parents are in control of the process, children might be left in the dark and potentially picking up the pieces during an emotional aftermath. The best bet for siblings is to communicate with each other — if the parents haven’t done so — especially if one child has more information.

“In many situations, you might have one sibling that is the executor of the estates, and the other is not,” Sheluk said. “So just being transparent — that other sibling is not going to have access to the same information as the individual who’s the executor.

“Having that executor lay things out in a very transparent way, communicating along the way, showing the other beneficiaries. Saying: ‘Here is what assets exist. Here’s where we are in the process. Here’s the tax bills that need to get paid.’”

With rare exceptions, all of this information should be legally shareable. Patience with the process and each other is also a wise practice, Sheluk added, as sometimes it takes years to settle an estate.

Not all siblings get along, however, said Tracey McLennan, director of the client consultation group at Edward Jones Canada. There could be childhood dynamics and resentment that has lasted into adulthood which might come into play within the will. Siblings may even be estranged.

“I think that there’s an opportunity (to have) a bridging conversation, if you’re able to reach out and say, ‘Hey, I know it’s been years. I know that we’ve not connected, but Mom and Dad, they’re getting a little older … I’d really love to use this as an opportunity for us to reconnect and have some conversations,’” McLennan said. 

Reaching out may not work for every sibling, she noted, but individuals can at least keep up on their own roles and responsibilities, including seeking professional advice.

“Making sure that you’re informed, making sure you know your responsibilities, making sure that you’ve got the information that you need, whether you’re executor or not executor, and attempting to get the outside assistance you may require,” McLennan said. 

Often, settling estates require tax, legal and financial planning advice, she added.

If there’s a vacuum of information from the parents, it may be natural for children to fill that gap with assumptions or potential reasons for decisions in the will. McLennan has seen children “blindsided” by inheritances and witnessed the aftermath as siblings blame each other.

“Sometimes, if we don’t have enough information, we fill in the back story, and we might be wrong,” she said. “Sometimes we take what we receive as a proxy for love: ‘Mom loves you best. She left you the business, she left you the farm, she left you more.’”

But that’s a mistake, McLennan said, as there are many considerations that children may not realize. In her conversations with parents, they are also concerned about their children being negatively impacted by an inheritance, and they often look at other members in the family, not related by blood — such as spouses. 

Ideally, parents should have communicated their intentions clearly to avoid any misunderstandings, McLennan said, but when that’s not the case, avoid the blame game, avoid relationship breakdown. Support your sibling, communicate, and keep the family together — the latter is a priority, she added.

“When we speak with parents, actually, one of the things I often hear is, ‘Regardless of the wealth, regardless of what we want to have passed on, we want to make sure that our family still can get together for the holidays,’” McLennan said. “That’s actually the most important thing.”

Despite these sentiments, parents unfortunately might not understand how their reticence to discuss their estate plans will actually play out for their children, according to Sheluk.

“I hear a lot from parents, ‘My kids get along well today, they’re going to be just fine with whatever happens in the will,’” he said. 

“I think that’s totally the wrong mentality and perception to have. … Money does weird things to people, especially during high-emotion times, and that can lead to your kids who have previously had a great relationship to not having a good relationship anymore.”

You’re a few weeks into your new job and payday has arrived.

But reading your first paystub, it’s a little unclear what all of these deductions mean.

After all, the exact amount of your biweekly direct deposit never came up in the interview process.

Financial planning experts say understanding how deductions are calculated on a paycheque is vital for employees budgeting their money, especially those just entering the workforce or new to Canada.

Employers are responsible for collecting certain mandatory deductions from an employee’s total earnings and sending those to the Canada Revenue Agency. Employees are credited for having paid those amounts when filing their annual tax returns.

Gaetano Gagliardi, government relations and policy lead for the National Payroll Institute, said a common misconception is that people expect their “take-home pay to be closer to their gross pay.”

Gross pay refers to total earnings for a pay period not including deductions, such as income taxes or pension plan contributions. Take-home pay, or net pay, is the amount of money the employee actually receives.

“Unfortunately, a lot of people just think about what’s being deposited into their bank accounts and don’t really look at everything that goes into that calculation — so not only your gross earnings, but all of those deductions that bring it down to your net pay,” said Gagliardi.

“It’s a known fact that a majority of Canadians don’t even read their pay statements. So if you’re not looking at your pay statement, then you don’t have that ability to plan, to budget properly.”

A survey commissioned by H&R Block earlier this year found more than one-in-three Canadians say they don’t know how to check how much tax they should be paying on each paycheque.

In addition, 35% indicated they don’t feel confident they would notice if their paycheque had an error in the tax deduction amount.

“There are more than 400 credits and deductions, so there’s a lot of elements to look for,” said Yannick Lemay, a senior tax expert at H&R Block.

“Always take a look at your paystub because a lot of people don’t even go online to get them or to look at them.”

Employees should expect multiple statutory deductions in each paycheque, starting with federal and provincial income taxes.

Statutory deductions also include Canada Pension Plan or Quebec Pension Plan contributions, as well as employment insurance premiums.

“Those make up the bulk of deductions from your pay, with income tax generally being the biggest chunk coming off your gross pay,” said Gagliardi.

Lemay added that any deductions appearing on a stub are also listed on a T4 document, making it easy for employees to claim those amounts on their annual tax returns.

Other possible deductions fall into three categories, said Gagliardi. 

Union requirements, if applicable, mean a portion of wages go toward union dues.

Organization-specific policies might mean there are regular contributions toward a charity, a registered retirement savings plan, or a social committee.

Lastly, there can be legal requirements, such as paying outstanding tax debts, family support payments or wage garnishments.

Ann-Marie Cary, director of global payroll and time solutions for Scotiabank, said other common paycheque misconceptions include employees believing some statutory payments, such CPP or EI contributions, are optional.

“These are mandatory statutory deductions for which every employer has a responsibility to deduct from the employee and remit,” Cary said in an email, adding employers must also contribute an additional percentage on behalf of each employee.

She noted that employees who work remotely without a requirement to report to a physical office will have taxes calculated and deducted from their pay based on the province in which the payroll is processed, rather than where they reside.

Gagliardi said it’s imperative for employees to review their pay statements and become familiar with where their hard-earned money is going.

Doing so not only paints a more accurate picture of their true take-home pay, but can also prevent an employer’s error from going unnoticed.

“Just having a basic knowledge of the deductions that go into your pay will help you understand or foresee what your net pay will be going forward,” he said.

After the death of their father in 2019, Amy Mushinski and her sister Dawn wanted to honour his wish that they keep the Scarborough, Ont., home they inherited rather than selling it to a new owner.

Although neither wanted to move into the house in the short term, they came up with a plan to fulfil his request — convert the property into a duplex that they could rent out.

But by the time the renovation got underway last summer, budgeting was paramount. Amid the overall rise in the cost of living, estimates for home renovation expenses were through the roof.

“We had a very tight budget. We didn’t want to take all of the equity out to do the renovation,” said Mushinski, noting she and her sister made many “budget-conscious decisions.”

“We limited ourselves to just under $300,000, which means that we had to make some choices that perhaps people who were going to live in the house wouldn’t make.”

The financial pressures weighing on households from inflation and high interest rates made it more challenging to spend on home renovations last year, according to HomeStars, a Canadian company that connects homeowners with service professionals.

HomeStars’ annual Reno Report for 2023 found that the average household spend on renovations was $12,300, down from $13,000 in 2022 and forecast to fall to $10,264 this year.

It said higher interest rates tend to pressure consumer borrowing for mortgages and other large loans, which are often relied upon for home renovation financing.

Mushinski said because of overspending in certain areas — she was surprised by how expensive door and trim replacements became — she and her sister were careful to find other savings wherever they could. That included decisions to spend less on kitchen design as well as flooring, where they went with vinyl over wood.

As a self-described “penny pincher,” she said she was on top of every expense throughout the process. Still, the pair were around $25,000 over their original budget when the six-month project wrapped up in February.

“Exposing yourself to that kind of financial risk, that was probably the most anxiety-causing part of the job itself,” said Mushinski.

“I was just making sure that I’m going to the cheapest places, I’m shopping the sales, I’m paying cash when I can. All of those things allowed us to do the investment where we thought it mattered a lot more.”

Mushinski added it’s important to make sure your contractor understands your financial limits.

Ryan Meagher of BVM Contracting, the company she and her sister hired, said many homeowners these days are forced to adjust their expectations of what they can afford when they set out their vision for a project.

Often, he said, it’s not until that discussion with a contractor that they realize only 50% to 75% of their plans will be possible to fulfil within their budget.

“We start with everything that they want — give them the budget for that and then work our way down until it fits,” said Meagher, BVM’s business development manager.

“It’s a multi-step process. You need to figure out how much it costs first and then seek out the financing. If the financing doesn’t meet the expectations for how much the project that you want to do is going to cost, then you have to dial back the scope of work.”

While BVM dealt with many larger home addition projects coming out of the pandemic, Meagher said those dropped off in 2023 in favour of smaller scale renovations, especially those focusing on a particular area of the home such as the main floor, basement or bathrooms.

But even minor projects tend to go over budget and it’s important to be prepared for that possibility, said National Bank of Canada financial planner Ravy Pung.

She said the biggest mistake homeowners make before a renovation is not saving enough money, leading to unwelcome surprises when issues emerge throughout the process.

“The client has to be aware that in a renovation, there’s always unexpected costs such as materials, labour and problems once the renovation has started, like mould and leaks,” said Pung.

“Even though they know at first how much it’s going to cost, we always have to budget a little bit more, just to make sure that we cover those unexpected costs.”

Pung recommends financing a renovation through funds saved in a tax-free savings account — which can be withdrawn without paying tax — but said it’s important to have a backup plan in case there’s not enough liquidity. In that case, she said applying for a home equity line of credit could help pay for the project.

“The earlier you save, the earlier you’re protected for not using a line of credit to pay for your renovation,” Pung said.

“There’s inflation, materials cost more now. But what I can say is to try to budget for it right away.”

The best-case scenario with a pre-nuptial agreement is that you never need to use it. But there are too many other scenarios to ignore — ones for which a pre-nup would’ve been helpful.

Even for younger couples who might not have acquired significant assets yet, there are still reasons to get one. 
Younger generations stand to inherit enormous wealth from property-rich baby boomers, and that financial windfall can be a sticking point later on.

In fact, when parents come in with their adult children to discuss inheritances, often pre-nups are a part of the deal, says Roselyn Pecus, managing lawyer at Roselyn T. Pecus Family Law Office in Vaughan, Ont.

“I have a client now who took a huge inheritance that she received from her parent and put it into the matrimonial home — never thinking that anything would happen to her marriage,” Pecus said. 

“I think people think of it as: ‘I’m protecting what I bring into the marriage.’ But I think what’s really interesting is what you can protect during the marriage.”

If that client had kept the cash, it would have been “protected as an exclusion at the time of the separation,” Pecus explained. But many people love paying off their mortgage with an inheritance, she added, not realizing the legal implications if their spouse became an ex.

Some people sign marriage contracts — another term for pre-nups — specifically because of these financial windfalls, Pecus added. 

Having children is another major event with lifelong impacts and financial repercussions, said Mark G. Perry, founder and family lawyer at Westside Family Law in Vancouver.

“Children have this capacity to change everything,” Perry said. That may include one spouse becoming a stay-at-home parent either temporarily or permanently to care for children, or daycare costs if both are working full-time.

If one person sacrifices their career for the unpaid labour of child-rearing, spousal support will be a key detail in divorce proceedings — a pre-nup will give that process some predictability, Perry said. 

Pre-nups can also protect growth on assets, whether it’s property or investment accounts, he added. If one person is lucky enough to bring a home into the marriage, and the marriage lasts 10 years, the value of that property has likely shot up dramatically.

“Without a provision in a pre-nup addressing the increase in value, [an ex-spouse] would be able to say, ‘I’m entitled to 50% of the increase in value,’” Perry said.

With a housing crisis and tight rental markets in many regions across the country, young couples may live together out of necessity, but living together reaches common law status within a few years. 

Once you are common law or married, you are governed by provincial family laws, which vary across Canada, Perry said. In British Columbia, he added, common law partners “have all the same rights and responsibilities as a married couple.”

A cohabitation agreement — basically the same as a pre-nup, for unmarried couples — works in these instances. 

These agreements can also include language that states the intention to marry in the future, Pecus said — and when that happens, the agreement will continue and serve as a marriage contract.

That can add another wrinkle: where are you getting divorced? 

If a couple lived in Manitoba for many years, moved to B.C. for work, and then divorced — one legal dispute might involve determining whether it was a Manitoban case or a British Columbian one, Perry said. Usually property issues are dealt with provincially, so the current residence is the priority, but it adds complexity to the case.

If you don’t get a pre-nup or cohabitation agreement, any divorce or split will be left to provincial laws, Perry said, and you may end up paying lawyers to determine how those laws apply to your situation. 

With a pre-nup, you’ve determined what outcome you both find fair before the emotional spiral of a relationship breakdown.

But it’s not easy to suggest to a partner, Pecus admitted. A marriage counsellor might help with the conversation. Or you can even throw your parents under the bus, she said, and say they’ve advised you to have a marriage contract drafted — especially if there’s an inheritance in your future.

The key detail is timing. Don’t ask for a contract one week or one month before your wedding, Pecus said. It could be challenged later if it’s done in a rush.

“So often, we’re running around at the last minute trying to get this done,” she said. “And it’s almost a reason to open up some marriage contracts, because it might be considered under duress when we’re doing it a week before, or a month before. So we want to get them done well in advance.”

A massive financial shift is set to take place in the coming years as baby boomers pass their assets down to the millennial and gen Z cohorts. But many parents aren’t preparing their adult children to handle that wealth.

CPA Canada says it’s expected to be the largest generational transfer of wealth in Canadian history, with younger Canadians expected to receive a combined $1 trillion in the next few years alone.

But talking about money is still taboo for many families, said Thuy Lam, a certified financial planner with Objective Financial Partners, a fee-only firm in Toronto.

“The reality is a majority of parents do not sit down with their kids. Not even a third of parents will sit down with their kids,” Lam said. 

Even after being in the finance industry for more than 20 years, she said she’s still shocked when a family has had an open discussion with their kids because it’s so rare. Having this discussion is always something she encourages, though. 

The unfortunate irony of this silence is a major fear among parents that their children lack financial literacy — they worry their kids don’t know how to manage money, Lam said. But it’s hard to learn a forbidden topic, especially if parents have specific wishes for their wealth. Lack of communication, Lam noted, can create family chaos around inheritances.

There’s extra sensitivity about inheritance because it involves death, said Tracey McLennan, director of the client consultation group for Edward Jones Canada.

“We don’t like to talk about mortality either,” she pointed out. “So now we’re pairing up money and mortality.”

However, parents are talking to their advisors. And it turns out they have a lot to say.

The top concern for this asset-rich generation is the financial literacy of their children, Lam said. The second biggest concern is their children’s spouses.

“Although the marriage amongst their kids and spouses are currently going well, you know, that’s sometimes a concern,” Lam said. “They want to be able to protect any inheritances from potential breakdown.”

McLennan sees that too.

“‘We love our daughters- and sons-in-law, but what if the relationship doesn’t last?’” she said parents often ask. 

“I think that we also hear parents are concerned that they don’t want to give the wealth too early, or in a way that will affect their children’s life or relationships.”

The older generation has worked hard for their money, and worked hard to save it, McLennan said. Her clientele tells her they’re concerned about their legacy being wasted — they want the inheritance to have meaning.

“They want to make sure that they are going to impact the next generation in an important way, and it not be wasted,” McLennan said. “Or if there’s enough funds, that it’s actually available for even more than one generation.”

Sometimes parents’ vision for the wealth can be very specific, she adds: paying for the grandchildren’s education or used as extra money for vacations their kids couldn’t otherwise afford. 

They might also want security for heirs that are self-employed or work for the family business, or perhaps have a disability or addiction. 

Adult children can sometimes get the conversation started if their parents have not. Sometimes Lam finds herself coaching the younger generation on how to open a dialogue: start by asking about the executor role.

“It’s in the positioning, right?” Lam said. “And it’s very genuine, because the estate plan has not only to do with the distribution of the assets, but also the executor role. Who’s going to take on certain roles of settling the estate?”

It might be a year between a parent’s death and the settlement date, she adds. “Imagine trying to learn that role and learn how to manage a big amount of money within a year’s time — that’s not a very long time frame.”

As a conversation starter, McLennan recommends offering assistance for what may be a stressful time for parents. Working with advisors, she adds, can help bridge the gap between family members by adding a mediator.

“Everything from making sure that we share instructions about documents, wills, powers of attorney to making sure that they understand what their parents’ wishes are.”

Adult children can start their own financial education by reading news, listening to reputable podcasts, and seeking expert advice, Lam said. Long before an estate lands in their lap, they can gain confidence about investing, debt management, and financial health overall.

This confidence, Lam said, can help with some of the anxiety heirs experience when suddenly managing large amounts of money.

McLennan agrees — adult children recognize the responsibility of the gift they’ve been given, which may impact the rest of the family, a business and a community.

“There’s a bit of fear, you know: ‘What if I make the wrong decision? What if I invest and markets go down?’” McLennan said. 

“I think there’s a great deal of worry, sometimes, about that role to steward. Most kids want to fulfil their parents’ wishes. And they want to make sure they do it well.”

Your parents are finally downsizing after 40 years in the same house. You want to help, but where to even start? 

It’s a dramatically different world from the last time they moved, in terms of finding quality services, researching options and comparing prices. This is where children can play a key role for their parents, especially those who may not be as internet-savvy, says Bill VanGorder, chief advocacy and education officer for the Canadian Association of Retired Persons.

“Often, adult children are more familiar with researching things online, have networks that they can check with, and are able to maybe dig a little deeper,” he says. 

“People get older, they don’t always access information [online], they may use the internet for email and for some entertainment, but they don’t understand the ways of finding good information.”

Significant costs and stress come with downsizing — so research and legwork can ensure a smooth transition to a new lifestyle in a smaller space, VanGorder says. Adult children might also have friends or spouses who have gone through similar experiences with their own parents and can share those best practices and referrals.

Moving and downsizing companies

Finding reputable moving services is a major concern for CARP’s 25,000 members, VanGorder says.

CARP works with the Canadian Association of Movers to share information and resources on its website, including warnings about moving scams. The moving industry is unregulated, the CARP website points out, so anyone can claim to be a mover.

VanGorder recommends using local CARP chapters and seniors organizations to find moving companies that specialize in serving older people. He says the process can be “very different for older people than it is for younger people, who are doing it for different reasons.”

If it’s a big move, a solo parent, or an adult child isn’t available to help, downsizing companies offer the full service: organizing and packing, donating and selling items, junk removal and the move itself.

Cindy Beaudet, owner of Destination Seniors Downsizing in Calgary, says a reputable service should have workers’ compensation insurance to protect clients against lawsuits in case an employee is injured during a move. 

“A lot of [downsizing] companies don’t,” she says.

Testimonials, references and reviews are a must, and Beaudet says detailed quotes ensure every service and cost is upfront. Her company’s quotes will have around 20 line items, with explanations of everything from elevators to travel time.

Another critical detail, if you want to recoup some costs by selling some possessions — ask downsizing companies if they have relationships with local dealers.

Selling possessions

Estate sales typically expect a minimum value of $25,000 in sellable items, Beaudet says, which is not realistic for many clients. Her company has relationships with dealers who buy in bulk, including furniture, antiques, coins and banknotes, jewelry, silver cutlery and original art.

If you’re looking into a downsizing company, ask for a track record of sales or dealer relationships.

“I have an art dealer,” Beaudet says, “plus I have a website I use, it’s called Art Price. So I’ll go into somebody’s house and I’ll just type the artist in and it tells me … the last 100 paintings that were sold, the valuation, I measure them and everything like that. So I can give them an idea — if it goes to auction, this is what it’s going to get.”

If you’re downsizing yourself, you can find dealers to offer a sum for the entire contents left in a house, VanGorder says.

There are also always donation options, including non-profits such as Habitat for Humanity, second-hand stores, religious groups, and newcomer organizations.

In terms of selling privately, via Facebook Marketplace or other local options, VanGorder says it might be fruitful if there’s a family member who is already active in selling on such websites. But generally, it’s a tough racket.

“It can be a lot of work, and it depends on what you have,” VanGorder says. “But things aren’t usually worth as much to other people as they are to us. So that’s often disappointing.”

Once these possessions are sold or donated, Beaudet says adult children can help with acquiring new, compact furniture pieces to fit a smaller space. For those moving into a senior residence, for instance, around 650 square feet is a common size of a unit, so seating and accent tables will need to be sized down.

Storage

Beaudet is blunt about the value of long-term storage.

“I’m sorry, waste of money,” she says. 

It’s better to donate or sell items now, she says, and adult children should get their parents on-board, helping them let go emotionally of possessions they cannot bring along.

“Typically, our clients are 86 and older,” she adds. “They don’t even access the stuff that they put into storage in the basement at the seniors’ home.”

For downsizers who might feasibly use items in the future, VanGorder advises asking storage companies for seniors discounts. 

Older buildings with storage space are often cheaper than the new builds that are popping up, he adds. But parents shouldn’t use storage with the expectation their adult children want all their stuff.

“One of the greatest disappointments people have is that they think they’ve got all these wonderful things that their kids are going to want,” VanGorder says. “Kids don’t want them.”

Adult children should let their parents know that upfront. They could save significant costs on storage, and perhaps earn them some cash if the items can be sold.

Middle-income earners will start seeing a larger portion of their paycheques going toward Canada Pension Plan contributions as of Monday.

A broader pension revamp began in 2019 as both the Quebec Pension Plan and CPP began phasing in enhanced benefits intended to provide more financial support for Canadians after they retire. So far, individual contributions — and the employer’s matching portion — have primarily ticked upward.

The trade-off is that Canadians will eventually receive higher payouts once they start collecting their pensions.

But as of 2024, the CPP includes a new, second earnings ceiling. For those who make more than a given amount, additional payroll deductions now apply.

“The primary objective of these changes is to strengthen benefits and enhance overall financial stability for prospective retirees,” said Alim Dhanji, senior wealth adviser at Assante Financial Management Ltd. in Vancouver.

Previously, everyone earning over the base amount (currently $3,500) contributes a set portion of their income, up to a maximum amount (last year’s was $66,600) that increases slightly every year. Those who are self employed pay both the employee and employer portions.

Starting this year, the enhanced pension plan now has two earnings ceilings.

The first tier works similarly to the old system: just like before, workers contribute a set portion of their earnings to CPP, up to a government-set threshold — for 2024, it’s $68,500. Those earning that amount or less won’t see any changes to their current contribution rates.

What’s new, for anyone earning more than that amount, is a second contribution level that tops out at $73,200.

People in this group pay 4% on their second-tier earnings, or the amount they make between $68,500 and $73,200.

The upgraded CPP policies, which continue phasing in through next year, were designed to significantly boost retirement income for Canadians — an increase from one-quarter of their eligible income to one-third.

Anyone who has paid into CPP since 2019 will receive higher benefits, but the full effects will take decades to materialize, so the youngest workers stand to gain the most. People retiring 40 years from now will see their income go up by more than 50% compared to the current pension beneficiaries.

Dhanji noted the changes will not affect the eligibility criteria for retirement pension, post-retirement benefits, disability pension and survivor’s pension.

The new, second threshold will affect employers as well as employees, Dhanji noted, since they are required to match their workers’ higher contributions.

Employers have been affected by the phased increase since 2019, he said. Between that year and 2023, both workers and their employers saw contribution rates rise by almost a full percentage point.

Canadian employers match their workers’ pension earnings as a part of the policy. While the pension amount gets split between the employer and workers, freelancers and self-employed people are responsible for paying both portions — a combined 11.9% for the first tier and 8% for the second tier.

“From a financial planning standpoint, employers can find assurance in the fact that these changes are designed to benefit their employees during retirement … contributing to enhanced financial well-being,” Dhanji said.