Why You Should Talk to Your Children about Their Inheritance

Why You Should Talk to Your Children about Their Inheritance


When working with successful farm and small business families I find that there’s a general reluctance to talk around any potential sale, succession planning, what’s in the parent’s wills or any discussion related to inheritance.  At some point children can benefit from discussing how, when and why wealth is going to be transferred.

For those of you who have a well-drafted, comprehensive, and up-to-date estate plan, it’s common to wonder when or if you should share the contents of your will or estate plan with your beneficiaries, especially your children. There is no right answer to that question, and legally, you’re not obligated to do so.

A will has no force or effect until your death: So long as you have legal capacity you are within certain limited exceptions free to change your will whenever you want. This is a strong argument in favour of keeping the contents of a will private.

Many parents have concerns that if their children know they may be getting a large inheritance, it could take away any motivation from them to want to work, knowing that they are in line to inherit a substantial windfall down the road.

There are times where disclosure should be considered: 1) Where the inheritance comes with obligations attached; 2) Where your estate plan may have the potential to cause discomfort or tension among one’s beneficiaries, and; 3) Where some preparation work on the part of your beneficiaries may be warranted ahead of time.

Your family cottage or family business are two assets that should not be bequeathed in a vacuum. These assets entail both rights and obligations and an equal distribution will seldom be the fairest distribution. As such, the succession of these particular assets falls squarely into the first category above and could also stray into the second and third. Both require a lot of discussion with the beneficiaries as to what is expected of them about future responsibilities and issues around sharing.

Successor ownership of a family business, farm or cottage is a common cause of estate litigation issues. Failure to realistically explore the options with all interested parties beforehand is often to blame here. This is where a meeting with your lawyer and accountant to understand all the issues involved should take place prior to committing pen to paper on a will.

If significant amounts of money are involved you may want to discuss your estate plan with your adult children. You’ve spent a lifetime amassing, and learning to manage your estate, so an outright gift to transfer it to the next generation may not be the wisest option. Trusts can be structured to provide a fixed income stream with staggered capital distributions, allowing beneficiaries to mature into their wealth.

An effective estate plan should be designed to reflect your goals and wishes, but also needs to be understood and accepted, even if not embraced by those expecting to inherit it. Remember that the last place your heirs need to find out your wishes is in your lawyer’s office after you are gone!

Keep open lines of communication: Ultimately, you should consider your estate plan from your children’s perspective. So start your planning process around the best way to get the conversation started with them, then keep talking. Get professional help if needed to work through any conflicts or issues that might arise.

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