Tag Archives: blended families

In wealth transfer, communication is as important as inheritance

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By Jim Greenwood, CFP

Special to the Financial Independence Hub

What’s the most difficult thing to talk about with your children? For many of us, discussing plans for our estate is pretty high on the list. Talking about your will and your own passing can be uncomfortable. According to a recent IPC Private Wealth survey of Canadians with at least $500,000 in investable assets, 58 per cent have not talked to their heirs about instructions for their estate, both financial and personal.

Having the inheritance discussion is very important, largely because of the consequences after your passing if you don’t have the talk. Perhaps one child wants to keep the vacation property while the other wants to sell, creating financial discord among siblings. Or there is a dispute about one’s final wishes upon death. The consequences are many and varied, and can be different for each family but equally devastating.

Holding the family meeting

As a financial planner myself, I can tell you that I am very happy to host or attend a family meeting, which should include the executor. It takes the pressure off you. Just let your children know that your advisor recommends having beneficiaries present during part of your estate planning process.

Or say you want to hold a meeting on your own. Beforehand, ask your advisor for coaching on approach and content. You’ll feel a lot more comfortable during the family meeting.

At my firm, we believe there are two main themes to a wealth transfer meeting. The first is about values. Share your views of money and wealth, ask your children what money means to them, and have a discussion. Tell your children what it took to create your wealth. Talk about the idea of a legacy – helping out your children and grandchildren with the hope that your children will do the same. Why discuss these ideas? You want to guide your children to a place where they feel appreciative, not entitled. Where they are trustworthy, not irresponsible.

The second theme is all about your will. Talk about how you’d like your legacy to be managed, and go through the distribution of assets, explaining the reasons for your decisions. This is where you discover if any of your bequests could unintentionally lead to conflicts between children, delays in estate administration, or your will being contested. If any problems arise, you’ll have the opportunity to resolve them — and you’ll be thankful you uncovered the issues now.

Wealth transfer for blended families

If you’re in a blended family, you have an additional layer of estate planning. Take the case of an individual in a second marriage who has children from the first marriage, and needs to provide for both the spouse and children. Continue Reading…

Financial Planning for blended families

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By Scott Evans

Special to the Financial Independence Hub

It may not be the most romantic topic to discuss on Valentine’s Day but it may be the most valuable for long-term happiness in your relationship. 40% of blended families admit to not discussing finances before moving in together but when you blend families there’s a long list of items for you and your partner to figure out. Your finances should be near the top. Dealing with financial issues early can go a long way to ensuring this next chapter in your life is all you want it to be.

Holding property – together or apart?

One of the first decisions you’ll have to make as a couple is whether to own property jointly or in separate names. What you decide will affect the way you manage money now, and determine how your wealth is passed on.

Some property like an RRSP or TFSA must be registered solely. But for other assets, including investment accounts, GICs or real estate, you have the option of sharing ownership.

Arranging joint title is handy where unrestricted, convenient access for either party is important; daily bank accounts are an example. It can also make sense if you want to share your property with your partner now and leave those assets to them when you die. Holding property as joint tenants with right of survivorship ensures ownership will transition smoothly to the surviving spouse. However, tenancy if your partner makes bad financial choices it could also impact you and your creditworthiness.

Keeping title separate is an option if you’re concerned about clearly tracing who brought which assets, or debts, to the relationship. On the other hand, if you still prefer sharing ownership with your significant other there’s an alternative: holding property as tenants-in-common.

Let’s say you bring assets from a prior relationship which you plan to leave to your children from that earlier union, rather than to your new partner or stepchildren. Instead of having title transferred automatically to your spouse upon your death as would happen in a joint tenancy, as tenants-in-common your share of the property remains part of your estate, meaning title can be passed to your heirs according to your will. You won’t be relying on your new spouse to ultimately decide your children’s inheritance.

Don’t forget to update important documents

Review key documents to ensure they still reflect your intentions. Including:

  • Beneficiary and related designations for RRSPs, RRIFs, TFSAs, life insurance policies and workplace pensions. At death, registered investments can generally transfer to your new spouse without immediate tax consequences.
  • Your will. In BC and Alberta, a will is no longer automatically revoked by marriage. That means any directives stated in your will, including those made benefitting your ex-spouse, stay in effect unless you alter them. However, no matter where you live, it is important to review your will during life events such as divorce or marriage.
  • Power of attorney and executor appointments. In blended family situations where adult children are involved, consider naming a third-party professional like a lawyer or trust company to these roles. Doing so can help head off any family conflict, while ensuring duties are carried out properly.

Options for estate planning

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