When building an estate distribution plan, there are several types of assets to consider. 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. A bank account, a GIC, and a marketable bond are all the same thing. Money is fungible.
Fungible assets are easy to deal with. Add them up and divide. No one 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. The solutions work better if they start early rather than after you are gone.
Non-replaceable assets fall into two types. Monuments like the family business, or family farm, and heirlooms like the cottage, home, art, the piano, the jewelry. Who gets grandpa’s family photo album or the family bible?
Your purpose of deciding is to enhance the family as a whole. To provide inter-generational emotional content. To preserve important experiences and memories.
There are multi-million-dollar estates that have led to bitterness because no one worked through the heirlooms. The emotional assets. Most are inconsequential in the financial sense. The greatest conflicts are often over something that is near valueless.
Trust your children to help find the solution on these things. 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. Being fair means the result is equitable. It is “equal enough” and heirs have the things they value the most.
Minimizing conflict and preservation of family history are important parts of your responsibility.
Don Shaughnessy arranges life insurance for people who understand the value of a life insured estate. He can be reached at The Protectors Group, a large insurance, employee benefits, and investment agency in Peterborough, Ontario. In previous careers, he has been a partner in a large international public accounting firm, CEO of a software start-up, a partner in an energy management system importer, and briefly in the restaurant business.
Please be in touch if I can help you. firstname.lastname@example.org 866-285-7772