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. Please note the blog posts are time sensitive and subject to changes in legislation or law.

Tuesday, December 14, 2010

One Big Happy Family - Until We Discuss the Will

What I want to discuss in today’s blog is the issue of whether parents should discuss their will with their children.

When there is a “black sheep” child in the family, or a child who is not treated equally in the will, I expect that a family meeting would likely be a disaster. But what about a meeting in situations when the children are treated somewhat equally? There is no right or wrong answer, but I think a family meeting is wise. Any meeting of this type can turn ugly because of money issues, but more likely, any ugliness will be the result of historical family jealousies or resentment over some prior issue or treatment. Nevertheless, if you feel you can navigate the minefields noted above, the family meeting can be very effective and useful.

The family meeting could be used to deal or clarify several different types of issues. For example:

  1. Possible perceived inequalities: The meeting could be used to explain why you have left your Picasso to your daughter instead of your son so that he doesn’t feel slighted when the will is read. This discussion could involve explaining that since your daughter studied Art History at university, you feel she would appreciate the Picasso; however, since it is worth $500,000, you have left your son $500,000 of stock to equalize (or you have not tried to equalize, you can explain why face to face). Also, where you have left more money to one child (perhaps they make less money than the other children), you can use the meeting to explain why and explain that it has nothing to do with loving that child more, you are just helping them since they have not been as fortunate as the other siblings.
  2. Determine wants and needs of the beneficiaries: Many families have second properties such as cottages or ski chalets. Some children may have attachments to these properties while others might not, or maybe you are not sure whether any child would want to take over the property when you pass. A meeting provides the opportunity to raise the issue for your children to decide among themselves if they will want to sell the property, share the use, or have one child inherit the property. This issue may be best discussed prior to a will being finalized.
  3. Deciding on an executor: Most children have no idea of the responsibilities and the burden of being named an executor of the will. You can broach this topic at the meeting to explain the duties of the executor and determine if the children or child you wish to be an executor(s) are/is willing to undertake the position. (Click here to view an article regarding the duties of the executor).
  4. Full disclosure: Finally, depending how open you wish the meeting to be, you can provide a current list of assets to your children so they know what assets you own and where they are held. You should also provide such a list to your accountant or lawyer, or put such a list in your safety deposit box, but you must ensure such a document exists and someone knows where it is.
The decision to have a family meeting to explain your estate planning while alive and in good mental and physical health is a complex decision based on past family history and relationships. However, if you feel the meeting can be held without creating a “civil war,” it gives you a great chance to explain your estate planning and to get everyone onside.

The Dentist’s Wallpaper

There is not much to do while you are in the dentist’s chair, especially if you are not lucky enough to have nitrous oxide administered. Personally, I look for anything to take my mind off that damn drill.

One day while having a cavity filled I started reading my dentist’s wallpaper. Before you say “I think you really did have nitrous oxide administered and maybe too much,” you must understand my dentist’s wallpaper actually has “life quotes” all over it. One of the quotes was “Life is Hard by the Yard, But by the Inch Life’s a Cinch.”

I don’t want to get all philosophical here, but I just found the quote so interesting; it actually took my mind of the drill. Such a simple adage that says so much.

We all can get overwhelmed when we look at all the tasks and requirements of our daily lives, but if you break those tasks down into bite-sized pieces, the totality of all the tasks is less overwhelming. Although this is easier said than done, I do try and remember this quote when I feel overwhelmed.

The blogs posted on The Blunt Bean Counter provide information of a general nature. These posts should not be considered specific advice; as each reader's personal financial situation is unique and fact specific. Please contact a professional advisor prior to implementing or acting upon any of the information contained in one of the blogs.

6 comments:

  1. Patriarchs of families often find it very difficult or do not want to discuss their wills with their children. I often hear comments such as "they will get what I give them" or "they will find out when I die" when I recommend that the patriarch hold a family meeting.

    Unfortunately, this attitude may result in sibling/family members fighting and squabling over the deceased's assets once he has passed away. This should be the last thing that the deceased would want.

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  2. The above blog and my next on intergenerational transfers of money both from parent to child and also from succesful child to parent; both revolve around the taboo of money. This taboo is difficult for most parents to overcome, however, there are clearly family situations where there are mature children and open families in which the topic of money and wills could be discussed.

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  3. Well said Mark! Estate planning is often about taxes and money but communication is the key to family harmony. I like the idea of a family meeting.

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  4. Excellent suggestions,Mark. In my practice, I see families torn apart by protracted and expensive estate litigation- litigation that could have been possibly prevented by having a dialogue with the family about the proposed estate plan. As professional advisors we need to encourage our clients to discuss and share their estate plans with their family and if appropriate,facilitate the conversation in order that the family buys into the plan.

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  5. Having listened to all of my dad's big ideas over the years regarding what to do for his kids in his will, he finally decided that having all of his property sold upon his death and splitting the resulting cash equally between his three kids was the right thing to do. Fair, equitable and no more stress over who gets the cottage, condo in florida, etc. Let's face it, the kids (who'll probably be 60 or so when he passes) can go and buy another cottage or condo with the money if that's what they want. It should be their choice -- not his. Nothing says "I loved you all equally" like an equal cash payment for all at the lawyer's office when the will is being read. I will be eternally grateful that the emotional baggage of who gets the cottage will be removed when that day comes.

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    1. As The BBC contemplates in his article, sometimes loving all kids equally means NOT dividing the estate equally...ex. mentally challenged beneficiaries, or beneficiaries that have had an "easier" life maybe should get more...or not. Something everyone should think about and come to their own answer.

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