Prevent Inheritance Disputes: Estate Planning for Siblings

Sibling relationships can be strained at the best of times—and a contested or poorly explained inheritance can make tensions much worse.

Josh Sheluk, a portfolio manager at Verecan Capital Management, advises parents to keep estate plans simple, transparent and well-communicated. However, he notes, that ideal is not always met in practice.

“Roughly half of adults in North America do not have a will,” Sheluk says. “Among those who do, some plans work very smoothly, while others lead to complications or surprises.”

Sharing information is key

When parents control the estate process and don’t share details, children often find themselves left in the dark during an already emotional time. If parents haven’t been forthcoming, siblings should try to communicate directly with each other—especially if one sibling has more information than the rest.

“Frequently one sibling serves as executor while the others do not,” Sheluk explains. “That executor will naturally have access to more documentation. The best practice is for the executor to be open: outline the assets, explain where the process stands, and disclose any tax liabilities or bills that must be paid.”

In most cases, this information can and should be shared legally. Settling an estate can take months or even years, so patience and steady communication with family members and the executor are important.

Dealing with family dynamics

Not all siblings have close or cordial relationships. Tracey McLennan, director of the client consultation group at Edward Jones Canada, says long-standing resentments, estrangement or childhood dynamics can surface around an inheritance.

“If possible, a bridging conversation can help,” McLennan suggests. “You might reach out and say, ‘It’s been a while, but Mom and Dad are getting older. I’d like to reconnect and talk about their wishes.’”

That approach won’t work for every family, but at minimum individuals should be clear on their own responsibilities—whether they are an executor or a beneficiary—and seek professional guidance when needed.

“Make sure you’re informed about your role, gather the documents you need, and get outside help such as tax, legal or financial-planning advice,” McLennan says. She adds that complex estates often require coordinated input from accountants, lawyers and financial advisors.

When parents don’t provide clear information, children often fill the gap with assumptions. McLennan has seen beneficiaries feel blindsided by inheritances and witnessed siblings blaming one another in the aftermath.

“Without facts, we create backstories—and many times those stories are wrong,” she says. “People sometimes interpret inheritances as measures of affection: ‘Mom must have loved you more because she left you the business or the farm.’”

McLennan cautions against that mindset. Parents consider many factors when making decisions, including how an inheritance might affect a child’s financial stability, the roles of spouses and non-biological family members, or practical decisions about who can manage a particular asset.

The importance of communicating clearly

Ideally, parents will explain their intentions openly to reduce misunderstandings. When that doesn’t happen, McLennan urges families to avoid assigning blame and to focus on preserving relationships.

“When I talk with parents, one of the things I hear repeatedly is: ‘No matter the size of the estate, we want our family to be able to gather for holidays,’” she says. “Keeping the family connected is often the priority.”

Sheluk warns that parents who assume children will automatically accept any outcome are mistaken. “I hear parents say, ‘My kids get along now, so they’ll be fine with whatever’s in the will,’” he says. “That’s a risky assumption. Money and grief can change dynamics quickly, and conflicts can emerge even among siblings who once had strong relationships.”

Read more about estate planning:

• How does a spouse’s death impact your TFSA contribution room?

• Should you take extra RRIF withdrawals to increase your estate?
• What type of financial advisor do you need?
• Estate planning for singles—is a trust company the answer?