Carla Seely Column: Think Before You Give

[Written by Carla Seely]

Think before you give: Four situations where you may not want to split everything evenly among children

During my childhood, the holiday season was the main time my relatives gathered together, both immediate and extended family. Most times it was at my nanna’s house with all my cousins – sixteen of us squeezed around two tables [the adults’ table and the kids’ table], enjoying a meal, having a laugh and perpetuating a great family tradition.

When generations come together, especially during the holidays, certain traditions are observed that have been passed down through the years. In my family these were simple things, like using Old Nanna King’s recipe when preparing the roasted vegetables we have all come to love, or coming over early to my grandparents’ house because the first-born girl got to do the table decorations.

Sometimes traditions might be connected to preparing a meal, or using a family heirloom such as Grandma’s china or Great-Uncle Albert’s brandy decanter. Strangely enough, as we sit down to that meal, rarely are we aware of Natalie and Chantal who continue to feud over who will get the sterling silver butter knives. But it happens, and it happens a lot.

So how do you decide what goes to whom, especially in the case of blood relatives? How do you pass on those heirlooms?

When my mother passed away four years ago, she stated in her will that all her jewellery be split evenly between her three daughters. Although my mother didn’t have a lot of “show stopper” pieces, she did have a couple of items that we all wanted. How do you divide assets evenly between three daughters when every piece holds the same sentimental value?

Firstly, to ensure that family memories are kept intact and treasured, your estate plan should include the orderly disposition of your material possessions. We may not always realize that a specific item holds special meaning to a particular family member, and without addressing this prior to your death, you have the making of a family feud.

The best way to address this is to ask each member what is important to them. When you create your estate plan, you can then properly consider how you wish to dispose of those items.

Secondly, make sure that you list in detail each item and the name of the intended recipient; share this list with your estate executor as well as with your family; and include the list within your last will and testament or other estate planning documents.

Sometimes family heirlooms are distributed prior to death so that both generations can experience the enjoyment of a family treasure that has been used or appreciated down the generations. However, if that is not your ideal choice and you would prefer to distribute after death, then you need to specify exactly who gets what and who doesn’t. It is important not to make a rash decision just because of a recent argument – you will need to think of the bigger picture.

Now, while most parents are inclined to treat all their children equally when it comes to an inheritance or distributing family heirlooms, this may not always be the wisest option.

Here are some scenarios where an unequal distribution can make sense:

Special needs child

Should you predecease a dependent child who requires full-time medical care and/or full-time institutional care, you will want to make sure that your special needs child receives the full-time care they require for the rest of their life. This can be a very expensive venture; having a life insurance policy with the child as the beneficiary can certainly help towards the cost. Another idea is to arrange additional voluntary savings through your pension plan; that way, you have built additional reserves that will ultimately benefit your special needs child.

Children with poor management skills

If you have a child who is poor at managing money and always struggling with debt, you may wish to consider setting up a trust which will either disburse certain amounts at predetermined ages or allocate funds for specific purposes only. If on countless occasions you have helped your child by paying off their debt, some would consider that to be an early inheritance. [If that is the case, be sure to explain your decision to each of them.]

Children with unequal wealth

If you have one child who is a successful entrepreneur and another who is a struggling freelance musician, you may wish to leave more to the child who is less financially advantaged.

Again, if that is the case, be sure to explain your decision to each of them. Most children equate money with love, so you don’t want to create resentment between the siblings.

Children in bad relationships

In the unfortunate situation of having a child who is a “serial spouse” or who is in and out of numerous bad relationships, shielding inheritance or family heirlooms is extremely important. You can’t choose who your children date or marry, but you can protect your assets from their unwise choices.

Finally, act early. Remember that the decisions you make now will ensure the smooth handing over of your family treasures to the next generation.

- Carla Seely is the Vice President of Pension and Investments at Freisenbruch-Meyer. If you would like any further details, please contact her at cseely@fmgroup.bm or call +1 441 297 8686.

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