CONSIDERING FAMILY RELATIONSHIPS
IN YOUR ESTATE PLAN
Family dynamics can have a considerable impact upon your estate plan.
- The first thing to remember is that after you are gone, dynamics can change. Unbeknownst to you, you might have been the glue that held your family together for years. In your absence, sibling rivalry could undermine your attempts at family solidarity.
- An effective estate plan makes sure that your wealth is preserved, family squabbles don't end up in court, and your family continues to work together. This could be a tall order, but it is possible. Your choice of executor is important. The executor must be capable of working with other family members, must be a good communicator, might have to be a mediator, and might have to make difficult choices.
- It is usually not a good idea to appoint all your children as executors. The idea might be that they all have to get along in order to make decisions, but this thinking can bog the estate down with inactivity and squabbling. In some situations, having more than one executor can be a good idea. An example is where one family member is good financially and another is a good family mediator. This could make for a good dynamic. Of course, if children really don't get along, then it might be wise to appoint a corporate or a professional trustee. This could be expensive, but in the long term it could, in fact, be cheaper and maintain family cohesiveness.
- In appointing executors and providing gifts to your children, you might have to examine the relationship of the child with their spouse. A child's spouse who doesn't get along with other family members can cause difficulties if that child is appointed an executor.
- A child's marital problems could result in your estate being dissipated. You might consider not providing an absolute gift for this child. You could create a trust for the benefit of that child. In this manner there is less chance that your estate would go to one of your children's spouses on a divorce or that funds would be spent frivolously.
- If one or more of your children appears incapable of providing for your grandchildren, you might also wish to set up a trust fund for your grandchildren. This enables the grandchildren to get an education or other benefit that the grandchildren's parents might be unable or unwilling to provide for them.
- You might need to clearly examine your relationship with your own spouse. If this is a second marriage, is the spouse likely to get remarried or change his or her Will upon your death? With joint tenancies on the house and beneficiary designations on RRSPs, the surviving spouse could receive all of your estate and then provide no benefit to your children upon his or her own death. If this is a possibility, you need to examine other options, such as setting up a spousal trust or life insurance for your children. If you have disabled or minor children, this is an even more important consideration, because you need to know that your children will be supported in your absence.
- When appointing guardians you need to look at the financial impact of additional children on the guardian. Will the guardian have sufficient funds? Should you make a direct bequest to the guardian or should the guardian have more specific access to the children's trust funds to provide for larger cars, bigger houses, etc.
When seeking professional advice on your estate plan remember to tell your advisors of any specific problems or potential problems that you foresee. One of the advantages of speaking to a trained experienced professional is that he or she will have ideas that can effectively deal with such issues.
Back to Preparing for Your Will Appointment