It is the kind of estate-planning drama that regularly plays out in the office of lawyer Barry Fish: A mother has two grown children. The daughter is her “good child” while the son is insulting, uncaring and estranged.
Despite the son’s black-sheep status, the mother wants to make peace and won’t cut him out of her will. She agonizes, and eventually decides to leave 95 per cent of the estate to her “good” daughter, whom she makes executor, and the remaining 5 per cent to her “bad” son.
“The glitch is that the bad son, once he finds out that he has a piece of the action, drives the good daughter crazy,” says Mr. Fish, who has been practising estate law for 38 years in Thornhill, Ont.. “He demands a full accounting of the whole estate, challenges everything, and creates no end of difficulty for her.”
Mr. Fish says the mother would have been better off writing the son a cheque for $10,000 and leaving the estate to her daughter. The son “is not going to get far challenging that in court,” he says.
Estate planning is an emotionally charged process, but having a black sheep in the family makes it vastly more complicated.
With more money at stake, and a growing focus on proper estate planning, what was once only an issue for the well-off has extended to older Canadians of all financial backgrounds. A huge transfer of wealth is soon to occur in Canada, with one estimate projecting that baby boomers will inherit $1-trillion over the next 20 years.
“Think about 10 families you know, and there will most likely be at least one black-sheep child in one of these families,” says Mark Goodfield, a tax partner at Cunningham LLP in Toronto and author of the Blunt Bean Counter blog.
Some fall under the classic definition of black sheep – a son or daughter who has embraced values the parents don’t approve of. But for the purposes of estate planning, Mr. Goodfield says, there are other kinds: the person who is financially irresponsible; the drug or alcohol addict; the person who has a partner the parents strongly dislike.
“A black-sheep child can be one that just spends crazily so parents have to deal with them separately in their will,” he says.
When there’s a family business, a son or daughter who doesn’t work for it may be considered the odd one out.
There are a myriad of issues parents struggle with: Do they reward the “good” child with a bigger inheritance? Or do they leave more money to the “bad” child, since they will need it more? What if he or she is married to someone they don’t trust? Sometimes, the parents disagree between themselves.
Of course, there is no rule that parents have to include all or any of their children in their wills. In the case of estrangement, some parents choose to cut a child out completely.
(In that case, it is important to “bullet-proof” the will by officially verifying the parent’s medical capacity, Mr. Fish says. To avoid a challenge based on undue influence, the favoured child should not be present when the lawyer and parent are working on the will.)
“From what I have seen, people are emotional powder kegs,” Mr. Fish says.
In most situations, parents would like to be even-handed.
“As a starting point, most parents want to treat their children equally,” says Elaine Blades, director of fiduciary services at Scotia Private Client Group. “At the very least, they want to be fair. I tell clients that fair and equal are not always the same thing.”
The more marriages and children you throw into the picture, the more complicated it gets, she says.
