Discovering surprises after someone’s passing can cause long-time rifts between siblings, step-siblings or the deceased person’s children and their surviving spouse.Getty Images
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Julia Chung helps people plan their estates. But she still had a hard time talking with her dad about what would happen after his death.
“That was incredibly difficult on both of us,” said Ms. Chung, a certified financial planner, family enterprise advisor and registered trust and estate practitioner based in South Surrey, B.C. Her dad has been through several marriages and divorces, and he was reluctant to speak about his finances with his adult children.
“It wasn’t until after his father, my grandfather, died without a will – which threw the family into a lot of difficulty – that he was willing to talk to me and my brother about what his plans were.”
For many families, talking about money and estate planning can be a fraught conversation. Parents may be unsure how much they will have left to give their kids. Adult children may fear that by asking for details, they will seem entitled. These conversations can get even harder with complex families, experts say. Up-to-date wills and open communication are crucial for everyone, but especially families with multiple tendrils creating overlapping or conflicting claims on the estate.
A death in a second marriage or blended family can be an inflection point with high stakes, says Ms. Chung, co-founder and CEO at Spring Planning. Discovering surprises after someone’s passing regularly leads to family breakdown, causing long-standing rifts between siblings, step-siblings or the deceased person’s children and their surviving spouse. They may feel anger at the deceased loved one.
“You are dealing with people who are in deep grief. They are angry and they are sad,” she says. “Lack of estate planning has torn families apart as long as we’ve been living in this version of society.”
Ms. Chung stresses the importance of starting the estate planning conversation early, because these issues may take time to be resolved. “Find a date [to talk about it] and try to make it within the next 12 months,” she says.
Defuse tension between family members
Tom Deans, the author of several estate-planning books including The Happy Inheritor, says that in many blended families, tension over the estate can start to build as soon as a parent gets remarried.
“‘Who is going to get dad’s money when he dies?’ becomes the elephant in the room,” says Mr. Deans, who is based in Hockley Valley, Ont., near Toronto. “People start making assumptions: ‘She is going to get it all. We’re screwed.’”
That often stands in the way of a good relationship between a new spouse and one’s children, leaving the biological parent “baffled” about why their new partner and kids can’t get along, he says.
Mr. Deans recommends all families meet with a professional such as a family enterprise advisor to come up with a plan together, noting that those who do often find that there is enough money to go around. The alternative – “some guy is going to sit down in his study and draft, all on his own, how he plans to transfer his wealth” – seldom ends well, as people often leave things to recipients who don’t want them or exclude people who do, he says.
“The idea that one person can figure out who’s going to get the cottage or the business, all on his own, is a fantasy.”
If getting everyone at the same meeting seems daunting, another approach is for a couple setting up their estate to come up with a plan together, then have one-on-one meetings with each of their heirs, suggests Matt Morrish, senior financial advisor with BlueShore Financial in North Vancouver. He suspects some couples avoid even this first conversation because they’re nervous about having mismatched expectations.
He gives this example: “Say I want to give my [tax-free savings account] to my children from my previous relationship. If I tell my current wife that, is she going to be upset?”
Be sure the right people have decision-making power
Having these discussions and updating one’s will and powers of attorney are essential not just to guide the dispersal of money, but also to make sure the right medical decisions are made for someone if they become incapacitated, Mr. Morrish says.
“If you haven’t looked at your wills together, you might not have the people you want to be making decisions for you making those decisions.” He has seen instances where someone’s former spouse had the legal power to make end-of-life medical decisions for them because their documents were not up to date.
Another big end-of-life question for blended families is what happens to the matrimonial home, says chartered professional accountant Mario Piccinin. For someone who has come into the marriage with a paid-off house, one option is to leave that house in a spousal trust. This allows the surviving spouse to live there during their lifetime, with it going to the children from a previous marriage after the spouse dies, for example.
Mr. Piccinin, a partner at Caissa LLP, an accounting firm in Cambridge, Ont., says this strategy is quite common with second marriages.
“If both spouses have contributed to a house that’s a little different,” he says, “but if one person owned [a paid-off] house at the start of the marriage, it’s a way of providing for your spouse but at the same time having those assets go to your children.”
