sibling inheritance dispute

A woman (let’s call her “Marge”) wrote into an advice column about the fallout over her sister’s inheritance. Unlike most of the stories we’ve written about inheritance, “Marge” wasn’t exactly upset about it. In fact, she was glad that her sister inherited everything from their late mother. Unlike other articles, this isn’t about a typical sibling inheritance dispute. Not at all.

According to “Marge,” the mother left everything her sister, “Charlotte,” and “100% earned it,” for all the care “Charlotte” gave their ailing mother. “Marge” explained that the mother’s personality of “throwing tantrums” had a cumulative effect of a) forcing multiple carers to quit, and b), escalting to the point of getting kicked out of multiple senior homes (three, to be exact).

Someone like that would naturally be very difficult to deal with: “Marge” kept limited contact with her mother, limiting their interactions to holidays and supervised visits. “Charlotte” on the other hand, stepped-up, took care of their ailing mother, and even organized her schedule around doing so. To take some of the burden off “Charlotte”, “her sister “Marge” would always watch her neices and nephews, while “Charlotte” took care of the mother. In this way, everyone was involved in taking care of the family.

After the mother’s passing, “Charlotte” was rewarded with an inheritance large enough to treat both herself and her children: galivanting about on trips and buying her children nice toys. No hard feelings on “Marge’s” part, no sibling inheritance dispute here, but “Marge’s” children want to know how to explain this turn of events to her own children, who now are asking why they can’t go on the same nice vacations, have nice toys like their cousins, or worse yet, why grandma didn’t leave any money to “Marge.” “Marge” is befuddled about how to handle this delicate situation, and wants advice. There was no mention as to how old her kids are, and how much “Marge” can tell them.

It’s a thorny situation: ideally, “Charlotte” would be including her neices and nephews into mix, perhaps buying them in a nice toy or two, but ultimately, she did earn the inheritance. She can spend it the way she wants. No doubt, “Marge’s” children would question the money either way.

The answer the sister was given:

“Marge” was definately taking the high road, and thankfully, wasn’t upset about being essentially disowned by her difficult mother. “Charlotte” did all of the heavy lifting, and while she doesn’t begrudge “Charlotte” at all, the issue lies with how her own children are taking the issue regarding the money.

Perhaps some would tell “Marge” to just come out and be honest with her children about the disinheritance. However, “Marge” was provided with an entirely different path:

“Marge” was told that she may not want to break the news to her children yet, at least not until they were older. All “Marge’s” children really needed to know, was that “Charlotte” was given grandma’s money to pay for some nice things, and that “Marge” wasn’t, because she and grandma weren’t as close as “Charlotte” and grandma were. “Marge” was further advised to tell her sister that she was going to have this conversation with her kids, and it might lead to her kids talking to their cousins, which may bring up a (further) uncomfortable conversation among the entire family.

All in all, despite the fact that “Marge” wasn’t close with her mother, everything does sound wholesome: there was no animonisty between the siblings, no split between the sisters, no jealousy on anyone’s part, just sisters helping each other out when necessary.

It’s a refreshing inheritance story that (thankfully) doesn’t involve any sibling inheritance dispute. One of the few stories that we’ve written about where an inheritance doesn’t lead to a battle among family members.

Four adult family members dressed in formal attire sit closely together in a living room, to discuss matters of inheritance

The great wealth transfer is currently underway: millennials/genz are finding some financial relief with some money trickling down their way from their boomer parents (this brings up an entirely different topic on the problem of generational wealth). For now, some millennials/genz have some money coming their way; this can go a long way to keeping some money in their pockets, given the absolute shamble of an astronomical cost of housing/rental market, sky-rocketing student loan debt, and a weak job market. Some millennials and genz are even getting “living inheritances” from their parents. The stigma that usually surrounds topics of dicussion around money and inheritance are slowly fading away – it’s no secret that income inequality is growing, and people are more open to talking about money, debt and loans. Having solid discussions surrounding inheritance and money can, at the very least, soothe any hurt feelings. You wouldn’t, for example, want one sibling questioning as to why he/she is getting less inheritance than another, so that’s why talking about it openly (no matter how uncomfortable) can really help out your family members.

A whopping $1-trillion is set to be passed down to millennials/genz in Canada by 2026. This unprecedented shift, happening one family at a time, creates the need for tailored financial advice. Obviously, parents are going to be wary about having their money being blown. This is why talking about money and the need to spend, save and invest it wisely is so crucial.

Wealth transfers are full of opportunities – and challenges. Keep these following strategies in mind to ensure a smooth process:

1. Start Open, Transparent Conversations Early:

One of the most vital, yet often overlooked, aspects of wealth transfer is open communication. When wealth transfer is shrouded in secrecy, it can lead to feelings of resentment and rumours among family members. It can cause fights and breakups. You may want to start by initiating the important (yet, somewhat uncomfortable) conversations surrounding money, your legacy, your estate plan, etc. Open and honest expectations for everyone involved means you’re off to a GREAT start.

Four adult family members dressed in formal attire sit closely together in a living room, to discuss matters of inheritance
Adult family members come together to have a meaningful discussion on matters of wealth in the family

Here are some steps to initiate those conversations, if you’re feeling uncomfortable:

  • Regularly scheduled meetings with key members of your family (children, spouses, trustees)
  • Discuss what you want to do with your money, your assets, your estate, and why
  • You may want to involve a trusted financial advisor or estate planner to help ease into these (difficult) conversations

2. Drafting a Comprehensive Estate Plan:

A comprehensive estate plan includes a Will, trusts, a Power of Attorney, a Living Will, and other principal documents. It also involves a comprehensive strategy about minimizing estate taxes, and other important decisions regarding your assets.

Boomer looking over payments
A parents looks over his Living Will

Here are some steps to initiate the process:

3. Minimize your taxes:

Estate taxes can significantly reduce the wealth transferred to your heirs. Therefore, reducing taxes when it comes to planning your estate is integral.

Father doing his taxes
A father furrows his brow as he goes over his taxes

Here are some steps to minimize taxes on your estate:

4. Succession Planning for Family Businesses:

Obviously, succession plans are necessary for family buisnesses to run. Without a succession plan in place, there is the possibilty of a family business being poorly-managed or fall apart without your prescence.

Parents over looking their succession plans
A couple looking over who will take over their business

Here are some steps to initiate the process of succession planning for a family business:

  • Identify the best individuals to run your family buisness (a child, star employee, etc.)
  • Training and mentorship are provided to said potential heir to the buisness. Mentorship is key
  • A succession plan with documented roles, responsibilities, etc., – are all provided – a training manual, if you will
5. Financial Literacy:

Obviously, coming into a sudden inheritance can be both a windfall and a hazard – a windfall to help you out if you’re struggling financially, but it can be a potential hazard if you just end up blowing your inheritance. Whether it’s a “living inheritance” or an inheritance your children receive upon your death, follow the steps below to help guide your family:

Estate Planning in Canada
No matter how young or old, it’s best to always review your estate plan

Here are some steps to initiate the process:

  • Encourage your children to attend financial planning sessions – they’re not only for the rich
  • Plan strategies through your trusted family’s financial advisor; someone who your children (or heirs) can depend upon. Later, they can switch to a different advisor, if necessary
  • Instill certain values: fiscal responsibility, philanthropy, prudent investments, wealth preservation
6. Review and Update Your Plan Regularly:

Life changes, and so should your estate plan: review it on an annual basis (don’t try to leave it on the backburner – we have had many clients who often leave creating their Will, Power of Attorney and Living Will to the day right before a vacation). Make sure everything is properly written out – don’t rush it!

family overseeing their estate-planning documents
Parents carefully reviewing and updating their Will, Power of Attorney and Living Will

Here are some steps to initiate the process:

  • Review your estate plan on an annual basis – perhaps once a year
  • Discuss modifications with your financial advisor, to keep abreast of changes in the law
  • Coordinate and discuss changes to your plan with your family members, so there are no surprises

An intergenerational philanthropic strategy:

This isn’t really part of your estate-plan, but you may want to look at the importance of philanthropic giving.

Philanthropic giving towards charities or causes you really respect or admire is always a good strategy of estate planning. It’s about giving back, and shows your loved ones the importance of being charitable.

man holding dollar bills
What would you do with your inheritance?

You can have a open and honest discussion with your family members about which causes they would like to support and why. How much of your estate would go to those causes? This can bring everyone together in the estate planning process as well.

You may want to read more about easing into smooth wealth transfers, here.

https://www.theglobeandmail.com/investing/adv/article-these-four-strategies-can-help-families-ensure-a-smooth-wealth/
man holding dollar bills

Many people view inheritance as a gold ticket: it’s the key to paying off debt, travelling the word, and living a life of luxury. Many Millennials have been suffering through a prolonged period of economic hardship since the great recession in 2008. The supposed “wealth transfer” might (hopefully) mitigate some of that financial blowback. An inheritance can change the person’s life for the better, if the money is blown on stuff they don’t need. Even a small amount of money is life changing in this day and age. If you’re lucky enough to inherit a small fortune, don’t blow that money. Besides doing the responsible thing and paying off your debts and mortgage, you can use it to have fun AND spread it around to your community.

Many people have used their inheritances to create positive and lasting impacts, honoring the legacy of their benefactors. When people inherit money, jewellery, or anything of value, there are those who choose to invest in their education or grandchildren, which releases a lot of the financial burden for their own children. While many people are relying on the possibility of an inheritance these days, only a few lucky ones may have the money to direct their efforts towards philanthropic efforts. This would include charitable foundations, funding scholarships, supporting medical research, etc. The latter is what we’re going to focus on today.

Let’s delve into the ways inheritance can be used as a widespread force for good:

Legacy

Social Changes

Humanitarian Aid

Startups

Guardian of the Sydney Harbour





Building a Legacy of Education

Leaving a legacy is important for many people. Regardless of an inheritance or not, many people do want to give back to their community. Many people choose to leave money for schools and hospitals. Some people have given back by donating to their local school system, either because they really believe in the importance of education, or they had a good experience at their former alma mater, or both. The people who inherit and choose to do good with their money aren’t just leaving behind a legacy in the field of education, they’re changing other aspects of society as well:

Catalyzing Social Change

Many wealthy people often leave money to charities or foundations in the form of philanthropy. There are a variety of causes to support and charities always need money. Philanthropy can ease the burden and leave a legacy behind for your heirs. There are some billionaires, for instance, who have promised to donate their entire fortunes when they pass away.

Humanitarian Aid Efforts

An inheritance can also bolster humanitarian aid efforts in other parts of the world. An inheritance can go to worthwhile causes, such as Doctors without Borders, provide support for organizations around the world, and much more.

Empowering Entrepreneurship and Innovation

There are always startups looking for seed money: startups offer new innovative ways to offer products that can change people’s lives for the better. Supporting these startups can lead to supporting something brand new and innovative.

Guardian of the Sydney Harbour

This brings us to Australian native Andy Orr: the 55 year-old former school teacher inherited enough money to leave his job and dedicate his time to something he truly passionate about: sweeping up the Sydney Harbour. Every morning, Orr leaves his house with his trusty hat, bucket, and gloves in tow. He spends each morning picking out the plastic litter that sweeps across the harbour. He came up with the idea while strolling along the harbour with his wife a decade ago. He began cleaning up the plastic debris in his spare time.

The inheritance he received in 2020 has allowed him to quit his job and pick up trash full-time.

The most common piece of garbage that he often finds? Plastic straws. Reflecting on the activity, Orr says that picking up litter full-time is a “meditative” process. He finds it calming.

What happens when the 55 year-old’s knees give away? Orr says he’ll continue his work from a boat.

You might argue that Orr is only making a small impact on the world; but he’s doing what he loves and his inheritance has freed him of any financial restraints. He’s doing good in the world. Will you do good in the world as well? Inherit and do good!

Inheritance can make a meaningful difference in the world.

A fistful of money

Updated: June 2024

Inheritance: everyone dreams of inheriting oodles of money from a rich aunt or uncle. But what happens when you actually get the money? It might not be everything you wish for.

Marlene Engelhorn is exactly in that position: she inherited a whopping $36.6 million dollar (in Canadian dollars) from her rich grandmother. She should be set for life, right?

Instead, the wealthy heiress is quite unhappy with the princely sum of money.

Inheriting the money was bittersweet for Engelhorn; it’s enough to live on for the rest of her life, but it left the heiress with a nagging feeling in the back of her mind. Engelhorn felt conflicted: “I am only wealthy because I was born in a rich family. And I think in a democratic society of the 21st century, birth should not be the one thing that determines whether or not you’re gonna get to lead a very good life,” Engelhorn was reported as saying.

She’s not alone: many wealthy Austrians have made their fortunes in finance, real estate, manufacturing, and the (burgeoning) tech field. The rich often reside in cities like Vienna and Salzburg. Austria, a country known for it’s profound musical legacy, being the birthplace of classical music legends like Mozart, Haydn, and Strauss, is a cultural hub for many who visitors.

Engelhorn began a campaign for heavier taxes on the wealthy in Austria; this included campaigning for an inheritance tax. Her pleas to the Austrian government fell on deaf ears; the tax inheritance laws that Engelhorn was hoping for didn’t come to fruition. She has therefore decided to spearhead a grass-roots campaign for heavier taxes to be levied against the wealthy in Austria.

Partnering with the Foresight Institute in Austria, Engelhorn is looking to have a committee of Austrian residents tackle economy inequality by redistributing the €25 million ($36.6 million Cdn) she is generously giving the committee to play with.

How does this work?

Engelhorn and the Foresight Institute invited 10,000 Austrian residents over the age of 16. The number will be whittled down to a lucky 50 residents, who will be randomly selected to form the “Good Council.” These members will decide (over a period of six weekends) as to how the money will be spent.

Engelhorn also continues to work with charitable groups, like Millionaires for Humanity and Tax Me Now.

She continues to lament that “the Austrian system shouldn’t allow her to accumulate so much wealth.” But without any inheritances taxes in sight, Engelhorn is left to her own devices to distribute her own wealth.

Until that changes, Engelhorn plans to give away most of her inheritance.

You can read more, here.