How to Build Generational Wealth in Canada

Generational wealth refers to the transfer of your assets—cash, real estate, investments, small businesses—from you to your children, grandchildren, great-grandchildren, and beyond. It involves investing wisely, planning strategically, and teaching your children how to manage money prudently.

Between now and 2026, an estimated $1 trillion will move from Canadian baby boomers to their heirs, mostly millennials. Given that only 30% of all wealth transfers in Canada are successful, with 95% of those failures attributable to a breakdown in family communication, it’s absolutely essential that you start planning your transfer of wealth and educate your descendants on managing their inheritance while you still have time.

Let’s take a look at what constitutes generational wealth, some ways to build it, and what should be done when you’re no longer the primary estate holder.

What is generational wealth? 

Generational wealth is your financial legacy. 

It’s the financial resources you leave to your descendants, which could help them get a jumpstart in life. It’s the money you’ve earned, the savings you’ve amassed, the small business you grew, the house and real estate properties you took care of. 

It’s your material possessions, but it’s also much more than those. It’s the financial wisdom you’ve learned over the years, the wisdom you can teach to your descendants, helping them take care of the assets you’ve left in their hands. 

What investments can build generational wealth?

Building generational wealth means having more than you’ll ever need, which ensures your descendants receive a piece of your estate. In order to save that much money, you’ll likely need to invest your savings in assets that have the potential to generate significant returns. Here are just three such assets that can do that. 

Stocks 

Perhaps the best way to amass generational wealth is to invest in the stock market. 

More so than any other asset, stocks have unlimited upward potential, meaning you could double, triple, or 20x your initial investment. Nothing is guaranteed (stocks have risks), but if you learn to invest wisely—a skill you can teach to your descendants—you could possibly accumulate enough wealth to pass down for several generations. 

To start, open an account with one of Canada’s best online brokerages. From there, you can invest in the companies you believe have long-term potential. 

ETFs

Those who aren’t ready to invest in stocks could still capitalize on stock market growth through exchange-traded funds (ETFs). 

An ETF is a basket of stocks (or other securities) that’s passively managed, meaning it tracks a market index. When you buy a share of an ETF, you get a little piece of each of these stocks. Unlike stock investing, you’ll never beat the market (ETFs track the market, but they don’t beat it). On the other hand, because your money is spread across numerous stocks, you get instant diversification. 

An ETF is great for those who want to deep their feet in the stock market, but aren’t ready to invest in individual stocks. They have lower fees than mutual funds, and like stocks, you can trade them on an exchange during market hours. 

Real estate

Along with stocks and ETFs, real estate properties have immense potential for accumulating wealth. When done right, real estate investing can create a strong cash flow, one that could continue to serve your family far after your death.  

For starters, your primary home is real estate investing. Your home will likely appreciate over time. Other examples of real estate investing include flipping houses, renting out residential or commercial property, buying vacation homes, or even buying land. 

If you don’t have time to manage properties, you could invest in a real estate ETF or you could invest in a REIF. Both of these expose you to the real estate market without requiring you to buy property. 

How do you transfer generational wealth? 

Transferring wealth across generations is about more than just writing a will. It’s about preparing your assets, your heirs, and the legal framework to ensure a smooth transition. Here’s how to approach it:

Step 1: Begin Wealth Transfers While You’re Alive

Start transferring wealth early to provide support and minimize estate complications later. Common strategies include:

• Education Support: Contribute to an RESP to help fund a child’s post-secondary education, taking advantage of government grants and tax-free growth.
• Home Buying Help: Offer financial assistance through gifts or loans for first-time homebuyers in your family — ensure it’s documented to avoid future confusion.
• Family Business Succession: Get children involved in your business early. Mentorship and phased ownership transfer can prepare them to take over.
• Tax-Free Gifts: Canada has no gift tax, so you can transfer funds without triggering taxes for recipients — though you may owe capital gains on certain assets.
• Instill Financial Values: Teaching investing, saving, and budgeting habits is as important as passing on wealth itself.

Step 2: Take Inventory of Your Assets

Before any transfer of wealth can happen, you need a complete, organized picture of your financial life. This is a foundational step that ensures your estate can be managed efficiently and according to your wishes.

Start by compiling a detailed list of everything you own. Categories to include:

• Financial Accounts: Bank accounts, investment portfolios (RRSPs, TFSAs, RESPs, non-registered accounts), pensions, and group benefits through your employer.
• Real Estate: Include your principal residence, vacation properties, rental properties, and land holdings. Note any mortgages or liens attached to them.
• Business Interests: Ownership stakes in private companies, partnerships, or family businesses. Include shareholder agreements or succession plans if available.
• Valuables and Personal Property: Art, jewelry, collectibles, vehicles, and other items of notable value that should be documented and appraised.
• Debts and Liabilities: Outstanding loans, credit lines, or other financial obligations that may need to be settled by your estate.

Step 3: Appoint Key Roles

Designate trusted individuals for specific responsibilities:

• Executor (or Liquidator in Quebec): Manages your estate after death, files taxes, settles debts, and distributes assets.
• Trustee: Oversees any trusts you set up—particularly if you want heirs to inherit at a certain age or under specific conditions. Often, the executor and trustee are the same person.
• Legal Guardian: Cares for your children and their assets if you pass away before they reach adulthood.
• Mandatary (in Quebec) / Power of Attorney: Manages your personal and financial affairs if you become incapacitated.

Step 4: Set Up Trusts If Needed

If you want to control how and when your descendants receive their inheritance, establish one or more trusts. Trusts can be a powerful tool for long-term financial security and responsible wealth transfer. They can help:

• Protect wealth from mismanagement, poor spending habits, divorce settlements, or creditor claims.
• Ensure continuity in support for minor children, dependents with disabilities, or family members not yet financially mature.
• Provide structured payouts at set ages or life milestones—such as 21, 30, or after finishing post-secondary education.
• Create custom allowances, such as monthly distributions or lump sums for specific needs like home purchases or tuition.

You’ll also need to appoint a trustee—someone reliable to manage and distribute the assets according to your instructions. Trusts offer an extra layer of control and peace of mind, and they may also provide tax planning benefits when structured properly under Canadian law.

Step 5: Name Your Beneficiaries

Assigning beneficiaries ensures assets pass directly and efficiently after death:

• Stay Updated: Review designations regularly and ensure consistency with your will to avoid legal conflicts.
• RRSPs/RRIFs: Naming a spouse allows tax-deferred rollover; naming others may result in a tax bill.
• TFSAs: A spouse named as successor holder keeps the account tax-free; others receive assets tax-free, but post-death gains may be taxable.
• Life Insurance: Bypasses probate and pays out tax-free—also name contingent beneficiaries as backups.

How can you help your children pass on the legacy?

One of the most effective ways to ensure your children and grandchildren manage inherited wealth wisely is to teach them how to budget, save, and make sound financial decisions early in life.

In Canada, structured financial education often starts too late. According to RBC, most Canadians only begin learning about personal finance around age 26⁽¹⁾ — an age when many are already facing significant money decisions, from student loans to mortgages. For some, it’s also the age when they start receiving inheritance, particularly from grandparents. This delay can leave young adults ill-prepared for the responsibilities that come with wealth.

Starting financial education earlier makes a big difference. Children who learn about money before age 18 tend to be more confident and capable:

• 66% of early learners say they feel equipped to make financial decisions.
• They’re also more likely to develop good habits around saving, budgeting, and investing.

You don’t have to wait for formal education to begin. Parents can take the lead by introducing financial conversations at home, encouraging budgeting for small purchases, or involving children in family financial planning. The goal is to build familiarity and confidence over time.

It’s also critical to model good financial behaviour. Children often learn more from what you do than what you say. By maintaining an estate plan and making thoughtful financial choices, you not only safeguard your legacy—you set a powerful example for future generations.

Foolish bottom line on generational wealth 

Generational wealth ensures that your hard-earned cash, investments, real estate, and other assets stay within your immediate family. 

Even if you’re still young, or you’re new to investing, it’s a good idea to begin planning the transfer of your estate now rather than later. Perhaps the best place to start is with a will. Even if your will changes numerous times over your life, as you add more people to your family or generate more wealth, having one in place will make the transfer of your wealth smoother, should something unexpected happen to you.