The Victoria Times Colonist

Estate of War
Poor Planning Is The Quickest Way To Rip a Family Apart

Grania Litwin
Victoria Times Colonist

Do you have a favourite family photo of everyone gathered round the Christmas tree, or sitting down to a steaming turkey dinner? Now imagine it ripped in half, literally, with two sides of the clan never speaking to each other again. That's the picture wills lawyers Barry Fish and Les Kotzer regularly see in their Toronto offices, and it's the result of poor estate planning. "We see the devastation first hand, and it's getting worse," says Kotzer, who notes financial planners look at wills and estates from the point of view of saving tax. "We do too, but we also want to avoid family fights."

In recent years they have seen a huge increase in family feuds. People are continually coming to them, wishing their parents had done things differently. "Few parents do what they should to protect their families from future fights," says Kotzer sadly. He also hosts a monthly television show in Toronto focusing on wills and estates where he receives scores of calls from fighting relatives, parents not talking to kids, brothers angry at brothers, step kids furious with step parents. "It's really horrendous."

Kotzer and Fish, who have 42 years of combined legal experience in wills, have just written a book called The Family Fight, Planning to Avoid it. They hope it will educate people about how to avoid inheritance problems, and spur better communication between parents and children. "We work in the trenches so we see what happens when kids are left picking up the pieces; we see the pain and anger." One of the main problems is people make assumptions they shouldn't, says Fish... "Never assume your kids won't fight, even if you leave them things of approximately equal value. Some of the biggest disputes are over rings, watches, cars, CD players, china, cabinets, tea cups . . ." In fact, never assume anything.

They describe a father who left his RRSP of $200,000 to his son and the rest of his estate, valued at roughly the same, to his daughter. When the father died the son went to the bank and picked up his cheque for a cool $200,000. The daughter was sent a $100,000 tax bill which was applied against the estate. "You can only imagine . . . ."

In another unfortunate case a father left his son a coin collection which had been valued at $15,000, and left each daughter an equal amount. The problem was, the coin collection had appreciated dramatically, "One daughter felt short-changed," The other didn't, but her husband was furious and made a big fuss. As Fish explains, "there are marriages all round, and various personalities, and one spouse elbows another, which can put the siblings into difficult positions. All because somebody decided not to update their will."

Parents sometimes inadvertently create tremendous inequalities. Say a parent assumes their house is worth $200,000, and leaves it to one child, while the others receive $200,000 each in cash. When the estate is settled the house is appraised at $550,000, but its inheritor refuses to even things up. "The other children feel slighted. They may even be furious at the parent, as well as their sibling. One of the dumbest things parents do is assume goodwill among their children. "We see a lot of problems caused by parents assuming their kids will work it out," says Kotzer. "Don't assume that if you have left one child a little more, that they will share. Even if a child wants to share, his or her spouse may not let him. " He described the case of a child who was in debt. The parent was afraid if the child inherited a large sum of cash, creditors would scoop it up. So they left everything to the other child, assuming he would share. That didn't happen, but a family rift did.

Some people aim to simplify things by leaving each child a fraction of the entire estate, but this can be unfair if one child has been a major caregiver. "It's always a tightrope: If you treat them equally one may feel slighted. We had a caregiver walk into our office at 2 in the afternoon one day, and leave at 4:30 after crying the whole time. She had looked after her mother week after week, month after month. She did it out of love, but there was some expectation that there would be some expression of appreciation, and none came." The treatment she received may have been unintentional "but the daughter found it callous, and deeply hurtful."

There are different laws in various parts of the country, and the authors have also written a version for the U.S., but they stress the book is not geared to any one area. "The issues are similar all across the country and what we try to do is give a birds-eye view, so when you see a lawyer, you have the background and can save on fees. We provide an in-depth analysis of what the lawyer will go through, and real examples."

Second marriages can be another can of worms, legally speaking. "I dealt with a family recently where the mother died and father remarried a woman with two children. Father and step mother always promised everything would be split equally, no favouritism, like the Brady Bunch. Dad died and left everything to step mother, but when she died she left everything to her own children, including dad's war medals." The man's son got nothing and never spoke to his step sisters again. The experts say even the simple appointment of an executor can create waves, "especially if one child gets all the power and turns into a dictator. "Many people assume the child with financial experience, or the one who has taken an accounting course, should be the executor. That's a false assumption. It might be better to appoint both children, or all of them. Parents should ask the kids if they want to be executors. You'd be surprised what they will say."

Home-made wills are another potential horror show, he said, recalling the case of a woman who left her siblings her "personal monies" in the bank. When she died, her two sisters claimed all the woman's substantial term deposits, not just the cash in her accounts. Her husband argued the large deposits were never intended for them. A fight between the siblings and husband erupted and finally the case went to court. "After tens of thousands in fees, the small bank accounts went to the siblings, and everything else to the husband. All that over two words." Many people get into problems because they don't fully understood terms like joint ownership or beneficiary of life insurance, terms which override what is stated in a will. "These items are no longer yours to give, they are already given to someone else...

"We had a case of a woman who left everything equally to her two daughters, but years back she had named one daughter a joint owner of a bank account, purely for convenience. Our client argued that the $20,000 in that account should also be split, but her sister declined."

"You have to bullet-proof your will if you want to protect your children," says Kotzer, who added it is also important to be financially organized, which is why the book includes a detailed planning list. "You'd be surprised how many children come in with a big plastic bag full of papers. They have no idea about their parents affairs, and we are not private detectives. It can be a real mess."