Honey, Is It Truly only Your Money?Ed Olkovich
I cringed reading a recent batch of newspaper advice columns. Someone wrote this: “I want to divide my estate unequally between my successful and unsuccessful children. Can I do it?”
The “advice expert’s” answer was short and sweet. She said, “It’s your money. You can do whatever you want with it!”
I think this is a load of rubbish. It comes from people who don’t know better, but have opinions about everything.
When you deal with money in your estate, you need to know the law. Technically, the newspaper answer is correct about adult independent children.
But let me tell you why it is not good advice. Despite what you may think, there are legal, moral and contractual ties that can restrict what you do with your money. And if you have a child with special needs, well, that is entirely another story.
Parents often feel that the unsuccessful child needs an extra portion. “More porridge, if you please.” It compensates Little Annie for not being as productive, as fortunate financially, as educated, or as accomplished, blah-blah. These are excuses and rationalizations.
I have no problems if you treat children unequally while you are alive.
But you must explain to your family why:
• Felicia is getting the restaurant,
• Billie gets the farm, and
• Jodie gets the summer home/cottage.
However, most parents do not want to do that. They probably have very good reasons. They can start a squabble that will tear the family apart.
So why do most caring parents try to treat children unequally in their wills? Because they think they can get away with it, and they get bad advice.
I tell clients to treat the children unequally while they are alive. That way you can explain it to your other beneficiaries.
You don’t want your children to learn about the unequal treatment for the first time in a lawyer’s office. Imagine their shock when a lawyer gives them the will. They learn they were being punished for:
• being successful,
• staying married,
• having multiple homes,
• paying off mortgages, or
• saving and investing money.
No one can explain why you treated them this way once you are gone. This is a question no one can answer. It causes heartache. It is cruel because no one can satisfactorily explain this to your children.
Why did you punish them in this way? A child asks, “What did I do to deserve a smaller portion than my sister? Why was I being punished for being successful?”
There is no one to answer.
If you give unequal shares in your will, make sure you tell your children while you’re alive. Tell them before you make the will. It will save you some money. You won’t go back to a lawyer to change your will.
What About Married and Common Law Spouses?
It’s a farce to think you have the freedom to ignore a married or common law spouse. These people are entitled to maintain the standard of living they had with you while you lived together. In some cases, they may be entitled to a better standard of living, especially if your middle name was Scrooge.
You need to recognize that you live in a village of entitlement.
Everyone wants or has claims to a slice of your estate. You must consider everyone, from the tax department to the person who drives you to medical appointments.
You can’t do whatever you want with your money. Is that clear by now?
If you do, you run the risk of these people hiring lawyers after you are gone. They can sue your estate. You must then satisfy all legal and moral claims against your estate.
Otherwise, your executors can spend years in court. Your beneficiaries and executors hire lawyers. Your estate gets frozen until all the disputes are resolved. We’re talking tens of thousands of dollars and years in court.
Did I get your attention?
Read my free guide, Estate Planning – 7 Keys to Success.
About Edward Olkovich
Edward Olkovich (BA, LLB, TEP, C.S.) is a nationally recognized author and estate expert. He is a Toronto estate lawyer and Certified Specialist in Estates and Trusts. Edward has practiced law since 1978 and is the author of Executor Kung Fu. Visit his website, mrwills.com for more free valuable information.
© Edward Olkovich 2013