Dr Peters, for many years a family
physician with a practice in southern Ontario, outlived
his spouse. By the time he died at age 89, his four
children were long out of the nest. One of his sons
had taken up the family business and had a practice
in the same town and fathered two kids of his own; son
number two was a successful broker in Chicago and also
had a family. His eldest daughter was an attorney and
a partner in a large Toronto firm. His youngest was
a painter and taught art part-time at Ryerson.
A nice stable family — on
the surface — but his death set off a firestorm
among the siblings that, almost ten years later, has
yet to subside. He had a will but hadn't looked at it
in nearly 20 years, before the kids were established
in careers. He left 60% of his estate to his daughters,
reasoning, presumably, that they'd need it more than
the boys. The boys weren't happy and as tempers flared
— the rule rather than the exception in such cases
— the brothers even suggested that their sister,
the lawyer, had unduly influenced her father.
Not that the girls were happy with
one another either. The father had, years before, made
a loan of $35,000 to the painter as the down payment
on a studio on Queen Street West. The artist swore she'd
paid it back but didn't have anything in writing and
the others weren't convinced. Then there was the matter
of the cottage on Lake Simcoe. The estate, the cottage
excluded, was small, less than $300,000 all told, a
shock to the family, but dad had chosen to live well
right to the end and had often joked that he intended
to spend every cent he'd earned on himself. The lakeside
property was valued at $1.2 million, the taxes would
be close to $600,000 but that was OK because father
had a $500,000 life insurance policy to cover it. Except
for one thing: it was a whole life policy and he'd borrowed
so heavily against it, the proceeds came to less than
$70,000. The siblings were unable to agree on a rescue
package for the country place they all loved and had
planned to keep in the family for generations, and it
was sold for taxes. The squabbling over the remains
of the estate continues. It will eventually be resolved
— one way or the other — but the damage done
to familial relations will likely be taken to the grave.
AN
OUNCE OF PREVENTION
On the surface, this may seem an extreme example, but
you know it isn't. You doubtless could tell a few tales
of your own of disastrous squabbles that have torn families
apart after the death of a parent. A few hours of your
time now can go a long way to preventing it from happening
to your kids.
Preparing an estate plan need not
be too painful an experience. No one likes to do it
because it forces us to focus on our own deaths (unlikely
as they are to ever occur) and because they do require
some dull paperwork. That said, a good plan can be put
together in a few hours and for no more than a couple
of thousand dollars.
Step 1: Organize your stuff.
One of the most difficult tasks faced by executor(s)
is finding everything. Take the time now to fill a file
folder with records of your mutual funds, your bank
accounts, your real estate holdings, stocks and bonds,
your safety deposit boxes (with the location of the
keys), insurance documents and any and every investment
you own. Ideally the folder will also include your will
— updated every three years; two powers of attorney
(see below) and indications of any insurance policies
you've specifically designated for taking care of estate
taxes.
Step 2: Go see your accountant.
The accountant's job is to minimize the taxes your estate
attracts, but he or she may have some other important
recommendations. Should you use a trust, consider joint
accounts, make provisions for charitable donations,
leave money to a minor grandchild or child (one way
to cut estate taxes). Your accountant may also suggest
certain insurance vehicles, especially if the estate
is large. If you decide to investigate this option,
go to an insurance broker who has access to several
companies. Even then, clear any suggestions with your
accountant before you act.
Step 3: Lawyer time. First
off, have the lawyer draft a will or update the existing
one. To die without a will is to sentence your heirs
to months, possibly years, in purgatory. Probate can
go on and on — make sure yours doesn't. The lawyer
can also help you avoid the kind of damage Dr Peters
left behind. Lawyers have seen it all and can make suggestions
to ensure that your estate is "fair and balanced" in
the treatment of your heirs.
Almost as important as the will
are powers of attorney. Consider two: one to deal with
your property and a second to allow someone you trust
to make decisions regarding your physical situation
should you become mentally incapacitated or in a coma.
Have the lawyer make these powers of attorney "continuing"
or "enduring" or, in Quebec, "a mandate." This will
ensure that they will remain in effect for years to
come.
Your lawyer will also help you
choose appropriate executors. One suggestion here: choose
two to ensure some balance and to share the workload.
If you have underage children the attorney can also
help you choose an appropriate guardian.
Step 4: Keep it current.
Your holdings change over time. The prudent review their
estates every three or four years.
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PHYSICIAN LIFE
