The Soft Side of Estate Plans


There are several types of assets people deal with when they build their “estate plan.”  It is a mistake to deal with all of them in the same way.


In the beginning, you can simplify the process by separating the assets into two types – ones that are fungible and ones that are not.  Fungible means that they are replaceable with an identical example.  $100,000 is money.  Money is fungible.  A bank account, a GIC and a marketable bond are all the same thing.


Fungible assets are easy to deal with.  Add them up and divide.  Nobody really cares where money comes from.


Non-fungible assets are more difficult.  They are not replaceable, and they frequently have an emotional component.  We see it with the family cottage.  A cottage worth $750,000 after taxes does not “mean” the same thing as $750,000 in bonds.  There are problems when all of the children want it.  There are approaches to that.  The approaches work better if they done early rather than after you are gone.


Parents need to spend time working on this part of their estate.  Non-replaceable assets fall into two types.  Monuments like the family business or family farm, and heirlooms like the cottage, the art, the piano, the jewelry.  Who gets grandpa’s family photo album or the family bible? 


Your purpose is to enhance the family as a whole.  To provide intergenerational emotional content to what you and your forebears have built.  To preserve important memories. 


There are multimillion-dollar estates that have led to bitterness because no one worked through the emotional assets.  Most of these were inconsequential in the financial sense.  Try to deal with a monument or heirloom so that the eventual owner will be the one who will derive the most satisfaction from possessing it. 


Trust your children to help find the solution on these things.


You need to do so because you probably do not know how they think about the heirlooms and monuments.  You definitely do not know how they relate to their siblings about them.  Chat with each.  Invite them to meet with their siblings.  Later host a family meeting to clarify preferences and wishes for you and to present you with the disagreements that have arisen.


You should make the final decisions.  Please do so.  It does not work as well when you abdicate that responsibility.  Even the ones that do not agree with your decision, will go along more readily if they think you did your best to make things work out for everyone. 


Being fair does not necessarily mean equality of money.  Being fair means the result is equitable.  It is “equal enough” and heirs have the things they value the most. 


Guaranteeing the preservation of family history is an important part of your responsibility.

Don Shaughnessy is a retired partner in an international accounting firm and is presently with The Protectors Group, a large personal insurance, employee benefits and investment agency in Peterborough Ontario.

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