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Friday, July 2, 2010

Is treating my children equally in my will the fair thing to do?

Most parents tell me that they want to treat their children equally in their Wills. This is not the law; you are allowed to give your adult children anything (or nothing) in your Will. If your child is handicapped or is a minor, that's a different story. Parents are pretty strict about making an equal distribution because they are well aware that doing anything else may give someone the impression of favouritism. Equal financial treatment apparently reflects equal love of the children.

For many of us, treating the children equally is as simple as stating in your Will that you want your estate divided among them in equal shares. After debts are paid and assets are sold, each child gets a cheque in the same amount.

Sometimes, though, it's not that easy. What happens when one of the children is going to inherit your business or farm? For many business owners and farm owners, that is the major asset. They don't have enough other assets to be able to give each other child the same dollar amount as the value of the business or farm.

I think business owners and farm owners should think twice before assuming that they should treat all of their children equally. To me, doing that ignores the fact that one of the children has been working in the business or farm and helping that asset achieve its current value, while the other children have not. Shouldn't that child be entitled to a larger share of the asset? Also, the child who inherits a business or farm is not being given anything for free; he or she is being given a means to make a living. The other children, who will receive cash or real estate don't have to do anything at all to get the full benefit of their inheritance, while the child inheriting the farm or business is going to have to work hard to get the value.

Having said all that, I am well aware that parents are still going to want to leave an apparently equal dollar amount to each child.

When calculating what you have in your estate to give to your other children, you should be aware that taxes arising in your estate are paid out of the residue of your estate. The residue is the part you are leaving to the child who isn't inheriting a business or farm. For example, if there is a capital gains tax liability arising on the transfer of the shares of the business from you to one of your children, the tax is not paid by the child receiving the business. It is paid from the money that the other children will inherit. Make sure you talk to an accountant or estate planning lawyer about tax implications when you are trying to equalize your estate among your children.

Even when there is no issue of a business or farm changing hands, it can be difficult to treat all children the same. Sometimes it's because there is a house or cottage that the parents particularly want one of the children to have. That house or cottage might be worth more than the child would receive if the real estate was sold and the money split.

Life insurance is one way of creating more wealth in your estate so that there is more available to give to your other children. It can be really useful to name your estate as your beneficiary so that insurance money pays into your estate on your death. Then it can be used either to pay taxes and expenses, or to top up shares to your children.

If you decide that you are going to leave an unequal amount to your children in your Will and you are afraid that this might cause hurt feelings or disputes, consider putting a brief clause in the Will to explain your reasons. For example, you might say that though you love your children equally, one is receiving a smaller share because you gave that child a lot of financial help during your lifetime and you want to treat everyone the same.


  1. In BC how can an adult child see the parents will. My Aunt passed and my cousin has been told by his sisters they are going to see to it he will get anything left to him in the will. How can he see if he was named in will? The sisters refuse to talk to him, they didn't even advise him my aunt had passed away.

    1. I get the feeling the word "not" was left out of your second sentence.

      I assume that the sisters you mention are the executors of the will.

      Usually I tell people to ask the executor for a copy of the will but that appears to be a waste of time in this case. The easiest thing would be to go down to the probate court and ask for a copy.

      Not all wills go to probate, and obviously I don't know if this one is going to. But if it isn't filed for probate and the executors won't allow your cousin to see it, his only recourse left is to apply to the court to see if a judge will compel the executor to give him a copy. I think the judge most likely would do so, given that it's a parent's will, that BC has wills variation laws, and that the sisters seem to have mentioned that he is a beneficiary.


  2. As the only daughter (#1 of 4) living in town, just as I was to begin my new career as a long haul truck driver, Mom's health took a downturn. I explained to the company and they said I could delay my start date. Mom never got better. I live 3 doors down from her and cared for her for what turned out to be two years. To remain in her own home, she needed someone to come in each day. I cooked, bought the groceries, took her to her cottage, Dr appointments, social gatherings etc. One sister wanted to move her out to a care facility. The other didn't contact Mom for 16 months after REALLY yelling (nasty, shrieking) at Mom about getting her estate together and threw the hangers she was waving in her hand at Mom, in the presence of extended family including young children. I left the room to get her husband who escorted her out of the house and told her not to come back.(she would go to a friends house to wait till Mom's family birthday dinner was done.) Now Mom has died and the Yeller and I are co executors and she, and old age home sister together are trying a variety of ways to make me sign off as an executor. I am being bullied, phone calls, e mails, name it. I did not work for the two years I cared for Mom (I had suffered work place bullying the year before and was working through severe depression at the time). I know Mom got the best care from me as she declined. I began staying over night about 6 weeks before she died. WE went to the hospital only 36 hours before she died, so I accomplished what I had promised to her; to keep her in her home as long as I possibly could.
    Because I did not take the career to stay home with Mom, I did not/was unable to pay her the rent I normally would do, on the house that I live in, which she also owned.
    My co exec sister, and the one who wanted to move her to a facility, say I now owe roughly $35,000 for the three years.I paid all my utilities, etc, rent did not officially get paid as I was buying her groceries, or take out, or driving her to her cottage, appointments or social things she might have.
    Those two sisters are now saying I have a conflict of interest because I 'owe' this money, but if step down as executor they forgive this 'debt' of mine. In the will, I have been allowed residence in perpetuity in the house that I lived in and paid rent on. I would pay taxes, mortgage, insurance and they would, (with me no longer as co exec) 'administer' over the house and establish that I am keeping the house in a reasonable state. I am not sure if I am being bullied, blackmailed, lied to etc, but,as co executor, I have yet to see any of Mom's 'books' where she kept meticulous order ...until she fell ill. I have asked for copies three times. Once was to the estate lawyer that 'the yeller' has known in business and socially for 40 years. Still no copies.
    Our youngest sister is trying to broker a deal between them and I, but it is killing her inside too. She has said yes, they are cold and mean When I was finally able to go in to see the lawyer myself, he was not very nice, and the friend that attended with me, asked him is we could step back a bit and keep a more cordial tone. I've lived in this house for 29 years. If only the two of them become co exec's, can they change all the rules, and make me leave my home? I feel just broken. Your thoughts would be appreciated.

    1. At this point, you need to ask yourself how much of this you can live with. If you step down as executor, they are going to walk all over you now and in the future. Can you live with that? If you don't step down, there is going to be a fight in court. Given the hard-nosed attitude they are showing you, mediation seems unlikely so it will end up being a battle for one of you to remove the other as executor. Can you live with that?

      They have decided that you owe rent for living with your mother. Perhaps you should counter with a claim for wages for caring for your mother.

      This isn't going to be pretty, whatever happens. Get a lawyer of your own.



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