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Estates & Wills & Trusts

Wealthy or not, parents have testamentary freedom

When musician Sting announced he wouldn’t be leaving any of his huge estate to his six children because he didn’t want them to have an “albatross” around their necks, a Financial Post article sparked debate about whether you are doing your children any favours by giving them “free" money.

“The wealth transfer from one generation to the next is expected to remain part of the financial conversation for years to come, especially if a landmark 2006 survey that said Canadian Baby Boomers stand to inherit about $1-trillion during the next 20 years, holds up,” the article reports.

The Post goes on to discuss other celebrities and billionaires  such as Warren Buffett, Michael Bloomberg, Bill Gates and Gene Simmons  who don’t want to see their children becoming spoiled or unambitious as a result of receiving large inheritances.

Toronto trust and estate litigator Felice Kirsh says while the huge estates discussed in the article are not indicative of the average Canadian's situation, the point remains that parents are free to do what they want with their money – subject to a couple of exceptions.

“They should have complete testamentary freedom and we have that in Ontario,” she tells AdvocateDaily.com.

The Post points to a recent poll commissioned by HomEquity Bank that found almost 40 per cent of Canadians aged 18-34 expected an inheritance.

Kirsh, partner with Schnurr Kirsh Schnurr Oelbaum Tator LLP, says that while most parents do want to give something to their children, children shouldn't expect an inheritance.

She advises parents to evaluate the size of their estate and look at their immediate family members and the financial situation of each child.

Also, it’s important to keep in mind that today’s families are much more complex than the nuclear family model. “Not everyone is dying with a wife and three kids,” Kirsh says. “They’re dying with a former wife, a current common-law spouse and three children, one of whom may have a disability.”

While the Post article highlights the concern celebrities have about leaving large amounts of money to their heirs – children who may lose ambition in the face of such a large windfall  Kirsh says most people are dying at a time where their children are already well into adulthood.

“If someone isn’t able to manage their finances at 30, are they going to figure it out at 35? I don’t think so,” she says. “Someone who gambles away their money is probably going to gamble away their money. Someone who invests in something risky might continue to invest in something risky until they’re 60.”

Adult children could use an inheritance to pay off debt or put money towards the education of their own children, Kirsh says. "It's not the same situation as a 20-year-old who might use the money to delay education, sail around the world or start a risky career."

Inheritance doesn't have to be all or nothing. "You can still give to charity and your children," she says.



 

To Read More Felice Kirsh Posts Click Here
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