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Wills: equality and inheritance
9/21/2018 5:52:06 PM
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Estate Planning
Insight on estate planning from one of Canada’s leading experts on estate law.



By Margaret O'Sullivan  | Monday, May 14, 2018


 



On May 4, 2018, we celebrated our firm’s twentieth anniversary. I thought it would be fitting as well as helpful to reflect on one of the most challenging questions in family succession: whether children should be treated equally. Being a trust and estate lawyer now for over 35 years has given me perspective, as well as some practical insight into this issue.

From a legal viewpoint, Ontario law and most common law jurisdictions provide for testamentary freedom, and you are free to treat your children unequally. Financially-dependent children can, however, have a claim for support in certain limited cases.

Let me start out with the observation that in my experience, almost all parents share the view that their children should be treated equally under their wills. Many are punctilious to the nth degree about this rule and right down to the last penny, particularly where some of their children may already have received financial assistance during their lifetimes, and under their wills parents wish to include provisions to equalize them. The notion of complete formal equality has often been a core value for them as parents, dating right back to making sure each child got the exact same size of that piece of apple pie. They know innately that to avoid disputes, equality is one line of defence.

From a cultural perspective, much has changed. If I were a trust and estate lawyer in 1940, there might have been a disproportion between sons and daughters, and if I were one in the nineteenth century, perhaps the eldest son would have been favoured. Having said that, traditional domestic approaches are being challenged by global mobility, and many clients with diverse religious and cultural backgrounds have different values and approaches to family inheritance and treatment of children.

Unequal treatment can lead to rifts

Not all parents may share the notion of equal treatment. Some may see giving one child more as being fair, and perhaps as a way to reward them for extra work and effort: “Heather has been helping me out since I had my stroke – I don’t know what I would do without her, and I have decided to leave her more than her two brothers.”

In other situations, unequal treatment can be used to show disapproval or disappointment: “We don’t approve of my son’s second marriage” or “My daughter doesn’t visit me as much anymore - we aren’t in touch like before, but my son always phones me every week and makes it home for the holidays.”

In these situations, it is important to understand the consequences and repercussions of unequal treatment, most importantly, on the children’s relationships with each other after the parents are gone. It should never be underestimated that unequal treatment when combined with grief can cause a powerful emotional reaction after a parent dies, and can harm and even destroy children’s relationships with each other and cause a permanent family rift between siblings.

A will can be seen as the final report card from parents to their children. What leads to disputes and even litigation is often not about the money itself, but the symbolic message conveyed to children who may view what is left to them as a measure of their parents love for them. Feelings of rejection and hurt that are unleashed in the aftermath can be the catalyst to litigation.

Exceptional circumstances

There are certain clear exceptions, such as where because of a severe disability, and if family finances simply will not allow for equal treatment, a disabled child’s needs will come first, and priority will be given to him or her under the will. In these cases, communication of the reasons for the difference in treatment and parent’s intentions is important, and children’s expectations managed so there are no surprises.

In other cases, one child may be very financially successful and another may not be. Parents may feel they want to give more under their wills to the less financially successful child “because they need the money” and their other child has no need. This situation can be a minefield. The financially successful child may feel they are being “penalized” for their success and that their efforts are all for nought if their sibling ends up with a much larger inheritance. I like to tell my clients that unless the financially successful child is on the level of a Celine Dion (and maybe even then), their child may resent any preference given to their sibling with this approach of “equality of result,” and that to ensure their children always remain close, they need to consider these consequences as well.

When it comes to family succession, as in the laws of physics, for every action there is a reaction. Successfully navigating family succession involves looking ahead to thoughtfully consider and understand the consequences of our actions and take them into account in successfully passing on wealth.

Margaret O’Sullivan is the principal of the Toronto-based trusts and estates law firm O’Sullivan Estate Lawyers. She practices exclusively in the areas of estate planning, estate litigation, advising executors, trustees and beneficiaries, and administration of trusts and estates. This article originally appeared in the O’Sullivan Estate Lawyers blog. Reprinted with permission.

Notes and Disclaimer

© 2018 by Fund Library. All rights reserved. Reproduction in whole or in part by any means without prior written permission is prohibited.

The foregoing is for general information purposes only and is the opinion of the writer. It is not intended to provide specific personalized advice on any individual situation, including, without limitation, investment, financial, legal, accounting or tax advice. Before taking any action involving your individual situation, you should seek legal advice to ensure it is appropriate to your particular circumstances.

 
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