No one wants their kids fighting over their estate when they’re gone, but the reality is that it happens. You’ve likely heard stories of families torn apart by estate disputes or maybe you’ve been involved in one yourself. Emotions run high when a loved one passes and throwing money into the mix can sometimes lead to disaster.
To avoid a feud between your own kids after your passing, it’s not a bad idea to be proactive when it comes to your estate planning. Doing so can minimize the potential for family drama and protect all that you’ve worked for in the process.
Here are some tips to keep in mind when planning your estate to help your family keep the peace.
If you want your wedding ring to go to one child and your prized collection of hockey cards to go to another, specify that in an addendum to your will. An addendum, when signed and witnessed by your lawyer, allows you to make minor changes to your will without having to redo the entire thing.
Consider liquidating assets
When it comes to assets that could change in value over time, like a property or stock, you could specify that you want those assets sold and split equally to keep it fair. Although the assets are similar in value today, what’s to say the property won’t be worth a significant amount more at the time of your passing while the value of your stocks plummet—or vice versa? By splitting assets based on their current value, you could unknowingly spur a dispute over who gets more.
Factor in the tax
Canada doesn’t have an inheritance tax, but that doesn’t mean certain assets aren’t taxable upon your death. If you decide to leave your house to one child and your cabin to another child, for instance, capital gains tax won’t apply to the primary residence but it will apply to the secondary residence. That amount can add up, shifting the balance of the estate ledger and potentially creating some tension between the recipients.
Have the conversation now
You might choose to divide your assets unequally, perhaps because of gifts or financial help you’ve given to your children throughout your lifetime. If that’s the case, spelling it out explicitly in your will can save your kids from confusion and hurt feelings.
Taking it a step further, you could have a family discussion to explain your decision. If your kids understand why your wishes are what they are, they may be less likely to fight over them.
Talking about it also spares them from the element of surprise and gives them a chance to ask you about your reasoning while they still can.
Gift your assets
Gifting assets while you’re alive can lessen the chance of a disagreement when you’re not. If your child has always admired a pair of earrings you own, for instance, gifting them ahead of your passing prevents them from being distributed with your estate.
Also, gifting some assets before death might let your loved ones skirt the issue of capital gains. It’s worth checking with your estate lawyer if that could be the case for your situation.
Choose the right executor
An executor acts in your place, settling your financial and legal affairs. Often, people choose one or more of their children to execute their will, which can get complicated if those children are also their beneficiaries and don’t necessarily get along.
Whether one party acts unfairly or causes delays, or both can’t even get on the same page to provide their signatures—as signatures of all executors are usually required to withdraw funds from an estate or settle accounts—it could be a bigger hassle than it’s worth to grant executor power to one or more beneficiaries of your will.
Depending on the qualifications and relationship of your beneficiaries, you could choose to appoint an independent executor. This person is required to take an unbiased approach, managing your affairs in a way that’s fair to all.
An estate lawyer will know the ins and outs of the process, going about it in a way that will reduce friction between family members. After all, when you’ve worked hard to build your business and family life, you want to leave behind your legacy—not a situation rife with conflict.
Get matched with an estate lawyer on vexxit.com to take care of your own estate needs.