Avoid feud over assets

Leanne Neal* love, love, loved the family cottage in Muskoka, Ont. “I am the third generation of my family to go there, and my son will be the fourth,” says the 50-year-old. But Neal’s younger sister had fond memories of the place too. Recognizing that, her father specified in his will that the sizable waterfront property should be subdivided. “It was his wish that we both get to enjoy it,” says Neal.

But after their father’s death, her sister persuaded their mom to change the terms of the will, arguing that they could share the property. That was an impossible dream. After their mother died, her sister moved into the cottage year-round. “She is not,” says Neal, “much of a housekeeper. She’s an ex-hippie type.” And yet, if Neal wanted to use the cottage, she had to put up with her sister…and all of her sister’s friends. She tried mediation, but got nowhere. Finally, she took the case to court. “It just wasn’t working,” she says. “I wanted legal partitioning.” Although the court agreed and made a judgment in Neal’s favour, her sister is appealing. The dispute has gone on for five years, and cost Neal about $97,000 in lawyer’s fees. In the meantime, to no one’s surprise, the sisters have stopped talking.

Think you and your siblings are above such nasty squabbles? Don’t be so sure, warns Les Kotzer, a Toronto wills and estates lawyer, with a special focus on avoiding family inheritance squabbles, and the co-author of The Family War: Winning the Inheritance Battle. He has seen families fight over everything from the family business to a Howdy Doody lunch box. Read on for some common sources of conflict, and ways to avoid or defuse it.

The family cottage

The family vacation property can become a battleground after a parent’s death, says Kotzer, mainly because of the emotional attachment that many sibs have for the place they spent weekends and holidays as children. Also, with prices for holiday properties going through the roof, grown children may not be able to afford to purchase their own cottage, or (even if the sibs are willing) to buy their brothers and sisters out.

How to avoid strife The key to familial peace: Discuss the situation while your parents are still healthy. If one child has a real connection to the place and the others hardly use it, a parent might offer the frequent user an opportunity to buy it from the estate, suggests Kotzer.

Other options might include a quick sale on the parents’ death (or even before) with the proceeds split among the kids, or random selection of a buyer from the eligible and interested siblings. For Neal, partitioning would have been the best option. But, she recalls, “I never fought for it when my mom was alive. I always felt it was her decision.” In retrospect, she says, that was a mistake.

Trying to work out some kind of compromise around the family cottage after your parents’ death? Start working early — before feelings begin to run high — to hash out the details of how costs and time will be shared, advises Neal. If you can’t agree, and all siblings are willing, opt for mediation to come up with a fair system — perhaps one sibling chooses a favoured time slot, after which the others take turns choosing weekends and weeks. You can alternate year by year. An additional safeguard: Put it in writing. As a courtesy, Neal informs her sister well in advance, by letter, when she is planning to be at the cottage.

The family business

Kimberly Hulsman, 44, and her brother and sister all work for the family giftware business in Stirling, Ont. Their father, who started the business 15 years ago, is CEO, while Hulsman is vice-president, her sister is president and her brother acts as head of distribution. It could be a recipe for disaster. After all, as Hulsman points out, “siblings know exactly what to say to piss you off.”

How to avoid strife The Hulsman family keeps things on an even keel by setting clear lines of responsibility and keeping the lines of communication open. “I would say we’re a close family,” says Hulsman. “We have our differences, but in the end that’s what makes this workable. None of us likes doing the same job.”

Each sibling maintains control in his or her own jurisdiction, she says, but if there is a major decision to be made — taking on a new product line, for example — they agree as a group. “It’s rare that one person would make a unilateral decision.” Business meetings are tightly focused, with an agenda, so everyone knows what’s up for discussion. Says Hulsman: “We all get a say on each item, and a chance to voice pros and cons. It’s not loosey-goosey.”

If they can’t see eye to eye on something, “we give it a three-day cool-down period.” During that time, every family member expresses his or her view on paper. “That way you’ve thoroughly thought it through, and it’s no longer emotional and heated,” says Hulsman. Should anyone bring up ancient history, the others issue a gentle reminder: “That’s getting too personal. Let’s bring it back to the issue at hand.”

The key thing, says Gary Coskey, a family business adviser and executive professor at the Alberta Business Family Institute, is that the Hulsmans have a process meant to keep things friendly. That is particularly important in families, “because, I think, oftentimes there is no formalized process.” But it’s not enough to just think, while he’s still alive, about how a family biz should be run after his death — there needs to be a succession plan in place too. Start the process as early as possible. It takes five to 10 years just to have the plan implemented, Coskey advises. That way, the founder can establish a clear career path for successors to determine if they’ve got the ability to run the company. “In areas where they are lacking, they can get additional training and have senior management put in place temporarily,” he points out.

Estate debate

Meghan Fitzroy*, a 44-year-old Torontonian, gives full credit to her brother Lloyd Sutherland* for caring for their mom during the final Alzheimer’s-ravaged years of her life. During that time, Sutherland lived in their mother’s house and hired extra help to ensure Mom was well looked after. When the elderly woman had to be transferred to a nursing home, Sutherland picked a brand new, well-equipped (but pricey) home, and paid for additional caregivers out of the estate funds.

But two of his four siblings felt he was excessive in his expenditures, says Fitzroy. The two siblings regularly blasted Sutherland with critical emails. If their mom’s specs were dirty, they complained. “It was ridiculous,” Fitzroy says. In response, Sutherland stopped keeping them posted about what he was doing and why. Relations between them broke down, and the two sibs eventually took legal action.

Fitzroy, who strove to remain neutral, was yanked into the conflict by a phone call from her sister. “If you’re not with us, you’re against us,” the sister said. So, with great sadness, Fitzroy took a stand and supported her brother, who had acting power of attorney. Their mother has since died, but the rift in the family remains. The tragedy, says Fitzroy, is that at a time when family should be pulling together, “conflict severs relationships and you don’t have support when you need it.”

How to avoid strife Everyone should name a power of attorney for personal care as well as for personal property, with a backup in case primary power of attorney is unable to act, says Kotzer. “Pay attention to whom you’re appointing,” he advises. “If you have three kids and are thinking of appointing an executor, I suggest you include a majority provision.” That way if one child doesn’t agree, the others can overrule and make a decision. If your children are very different, pick the one you think best understands your desires. “Then tell them what you want in terms of personal dignity, living arrangements and nursing care.”

As well, points out Fitzroy, everyone in the family should know in advance the responsibilities of the person holding power of attorney. “It doesn’t mean that you have to physically take care of the person yourself,” she says. “It means you’re responsible for hiring and coordinating care.” Although you can access bank accounts and other assets on your parent’s behalf, there are certain rules that you have to follow. “Keep receipts for everything,” Fitzroy advises.

Discuss the will to avoid suprises

Another crucial piece of documentation is a valid, up-to-date will. Discussing the will in advance offers an opportunity to explain the intentions and reasoning behind it. It may help eliminate faulty assumptions that will cause resentment later — that one child “doesn’t need the money,” for example, or that another will be generous in sharing an asset. Points out Kotzer: “When children are surprised at the contents of a parent’s will, they may believe that it doesn’t reflect the parent’s true wishes.”

A final tip from Fitzroy: If you have an issue with how the will has been settled or how the power of attorney operates, voice it — in person. Emails helped foment dissent among her siblings, she says. “You can’t communicate effectively by email, especially when you’re talking about emotional things. You can’t gently say, ‘Can you tell me what you mean by that?’”

Frustrated? Before you call a lawyer, ask yourself whether it is worth it, suggests Kotzer. “This is not like suing a major corporation. You’re suing your sibling. The relationship may never be the same.” Fitzroy can attest to that. “We were always such a close family,” she says sadly. “And then something like this happens and there’s a rift forever.”

The small stuff

Jennifer Barak*, 60, was chatting with her sister-in-law in Nanaimo, B.C., as she packed away a hall table and chair from her recently deceased mother’s estate. Her brother, also visiting from out of town, happened on the scene and erupted. “What are you doing?” he asked. Barak explained calmly. But her brother ripped the table out of the box and walked out the door with it. “I already talked to Mom about this,” he snapped. “She said I could have it.”

How to avoid strife “Some of the biggest fights we see are over personal items,” says Kotzer. “You can’t share a painting on the wall.” To avoid such disputes, go through the contents of your parents’ home while they are still able to make decisions, he suggests. “It’s much easier to swallow if they say, ‘Look, Les always wanted that dining room table. I’m telling you right now, he’s getting it. Now is there anything in the house that is important to you?’”

Although Barak went through that process, her sibs weren’t around at the time, and that can be a problem. “It should be all the siblings,” Kotzer advises. “That way there’s no argument about what your parents wanted. And there should be a rule that whatever you gave to your parents, you take back.”

If it’s too late and you’re divvying up the antiques and jewellery in the aftermath of a parent’s death, Kotzer suggests opting for a neutral solution. Draw straws for the right to pick the first item and then alternate choices, for instance. And be big about things. Barak admits that her back went up when her brother grabbed the table. But she was able to stifle an angry retort by recalling what her brother had gone through recently, including the loss of his job and a serious illness. “I think it is part of the grieving process too,” she says. “You sometimes grab at things for the sentimental value.” Her philosophy: “A piece of furniture is not worth a conflict in the family.”

*Names changed by request

Four tips to keep family discussions civilized

Be courteous As a rule of thumb, try to conduct yourself as respectfully as you would if you were in a meeting at work with non-relatives.

Stay focused Families share a long history…not all of it good. Steer away from bringing up that blouse your sister borrowed and ruined back when you were 13, and keep to the issue at hand.

Express your views calmly Can’t keep a lid on your emotions? Walk away and return when you are calmer. Better yet, write your feelings down and have a disinterested third party take a look before presenting your point of view.

Thumb through the family photo albums Before you turn to the courts, take a stroll through the past. You walked to school, played on the beach and shared Christmases with your sibling, says Les Kotzer, a Toronto wills and estates lawyer and the co-author of The Family War: Winning the Inheritance Battle. “Why would you want to ruin that relationship?”

This article originally appeared in the Summer 2008 issue of More