750 BILLION REASONS TO HAVE ‘ THE TALK’ ABOUT INHERITANCE.
According to a CIBC Economics s t udy from last year, Canadians can expect a $ 750billion windfall from inheritance over the next decade. It’s a record amount, and a 50- per- cent increase compared to the previous decade.
But when $ 750 billion changes hands it can create a lot of tension. In talking to older clients, one comment I often hear is, “I just don’t want my children and their families to fight after we’re gone.”
Unfortunately, in some families, inheritance can be the ticking time- bomb that sets off just such disputes.
Let’s consider some of the potential explosions: Children feeling that they are being unfairly treated ( usually based on the past); blended families battling over ‘ what’s ours’ and ‘ what’s ( not) yours’; siblings expecting more based on the nature of a relationship or for having taken on certain responsibilities; differing beliefs regarding who deserves or needs more; concern over money going to philanthropic causes and not all to the family; and disputes over the cottage, the valuable art, and the distribution of personal possessions.
Is there a way to prevent this kind of fall-out?
Often the best way is to talk and communicate with family members to let them know of your views, thoughts and ideas, and to hear theirs.
Some families do make this work. I recently had a call from a client in his mid90s. For the past decade we have worked with him, his wife and their children. He called to thank me for helping to guide his family, and he was feeling calm and comfortable about his financial legacy. In particular, he thought each of his children will be taken care of appropriately and will not be left with heavy burdens.
I felt great about the call, but most of the credit goes to the family themselves. They have thought about these issues, discussed them, and put plans into place while everyone had the wherewithal to understand both the ‘ how’s’ and the ‘why’s’.
Sometimes things don’t go as well.
According to social worker and family facilitator Resa Eisen, “it can be particularly challenging for families to discuss matters of money because it can stir up feelings about the past and the future. Bringing in a neutral third party can help families share information, clarify concerns and help them move forward with their plans.”
Eisen describes one family where she was contacted several months after the mother was diagnosed with early stage dementia. Given this new reality, the financial plan had to change. Of their three children, the eldest daughter, a nurse by training, stepped up to become her mother’s caregiver. The father was extremely grateful, and he wanted to compensate/gift to his daughter now. Most of all, he wanted to protect his wife’s long- term financial security.
This changed the financial landscape for the other two children, and there was already some tension between the siblings. In fact, at the last family gathering, there were raised voices between two of his daughters.
Talking to the siblings, and to the parents, Eisen was able to understand not only the differences in viewpoints, but the similarities. The common denominator was that everyone wanted the best for the mother.
In these conversations, the siblings learned more about what their parents wanted, and had a much better appreciation of their needs.
Likewise, t he parents understood what was important to each of their children.
When t hey all c a me together for a family meeting, they were able to contribute to the plan, not only for their mother and father, but for them as well. Even the grandchildren became part of the father’s ultimate decision-making and plan.
There are many stories of families that are torn apart by an estate. Don’t let yours be one of them. Where there are already meaningful family rifts, the challenge will certainly be greater. Yet without the family talk, an estate is very likely to cause things to get much worse. In these cases, you need to have the courage to deal with some issues today. Whether you do it alone, with the help of a financial adviser or with a trained family facilitator, the family talk needs to happen.
Ted Rechtshaffen is president and Wealth adviser at TriDelta Financial, a boutique wealth management firm focusing on investment counselling and estate planning. tedr@tridelta.ca
HAVE THE COURAGE TO DEAL WITH SOME ISSUES TODAY.