Educational resources

Find resources

Our educational resources have been created to give our clients information about a wide variety of topics.  Please see below for our featured articles or select a topic in the sidebar for more detailed information. 

Your Estate Plan – Taking a Second Look

The Financialist • Issue 123 • October 2014

BY ANNE HAMMOND, BA CFP CIM

You have made out a will, and you have set up a power of attorney document and a representation agreement. So your estate plan is all in order now, right?

You might think so, but there may be a few things you should revisit. Some of what you leave behind for your beneficiaries may be straightforward – gifts of cash or items with emotional significance attached to them. But some of the items in your estate may not be so simply disbursed.

For example, if you own a family cottage, it may represent a significant portion of the value of your estate. And if you’ve owned it for a long time, there may be significant income tax on any capital gains that will be incurred upon your death, or the death of your spouse.

Generally speaking, people want to distribute their estates equally and fairly among their children. “Equal” and “fair” may not be exactly the same thing, but that’s a discussion for another article. Our question here is: if your cottage represents a large portion of your estate, do you need to discuss your plans with your children?

Perhaps all of your children would like to keep the cottage in the family, but some of them use the cottage more than others do, and they don’t really get along well enough to own and maintain the property jointly without causing hard feelings and difficult conversations. Or perhaps they do, but not all of their spouses get along as well as they do. It’s important to keep in mind all the personalities that will have to work together.

Let’s consider another common scenario: your daughter is financially well-off but already owns her own vacation property; your son is not so well-off and while he could afford to maintain the family cottage, he cannot afford to buy out his sister’s portion of it, even though he would like to keep it.

If you have not had frank and open discussions with your children about the cottage and the wishes expressed in your will, you may be leaving them with difficult problems to solve at the same time that they are grieving your loss.

In the first scenario, having open discussions with all of your children and their spouses may give you the opportunity to work together to decide on some alternate arrangement rather than putting them in a joint ownership situation that won’t work out well. 

In the second scenario, an open discussion may give your son the opportunity to set up a relatively inexpensive life insurance policy on you and/or your spouse that would generate the funds needed to allow him to buy out his sister’s portion of the cottage.

The family cottage is only one example of an inheritance that should be discussed well before your death (and perhaps even before you finalize your estate plan). Other examples might include things like a family business or a valuable piece of art. If you’re not sure whether you need to discuss the details of your estate plan with your beneficiaries or not, here are some guidelines to consider:

1. Are there obligations attached to this inheritance as well as privileges?

2. Is there anything in your estate plan which may cause tension or discomfort among your beneficiaries? Keep in mind that grief makes everything more difficult.

3. Is there anything that your beneficiaries can or should do in order to prepare for receiving their inheritance?

Obviously, you cannot avoid or solve every potential problem for your beneficiaries, and in some cases, you may be worried about either limiting your own options for making changes in the future or causing your beneficiaries to feel a demotivating sense of entitlement. These are valid concerns and should not be discounted.

If you think any of these issues might apply to you, please feel free to call your Rogers Group Financial advisor.


Send this to a friend: E-mail

"We have been very happy with the professional and efficient service provided by our advisor."

Jim & Deb B.