What to know when passing on family heirlooms

Holiday seasons are traditionally times when families gather together; both immediate and extended families.

Generations combine and honour holiday traditions that have been passed down through the years.

Oftentimes when getting ready to prepare that special holiday meal, traditions will include material possessions such as bringing out Grandma’s china and silver to set the holiday table or Great Uncle Bob’s brandy decanter.

It could even be as simple as using Old Nana King’s recipe when preparing the casserole that is always served. As we sit down to that meal, rarely are we aware of Melanie and Jennifer who continue to feud over who will get the sterling butter knives. But it happens and it happens a lot.

How do you decide what goes to whom especially in the case of blood line relationships? How do you transition those heirlooms?

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, then you can 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
• Include the list within your last will and testament or other estate planning documents

Very often family heirlooms are distributed prior to death so that both generations can experience the enjoyment of the heirloom.

If that is not your ideal choice, then you need to specify exactly who gets what and who doesn’t.

Thirdly, while most parents have the inclination 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 pre-decease 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.

Children of 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.

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 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 early inheritance.

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 shouldn’t choose who your children date or marry, but you must protect your assets from their unwise choices.

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

Carla Seely is a senior wealth manager at AFL Investments. She may be reached at 294-5712 or [email protected].