How to avoid problems stemming from contested wills

Messy inheritances

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Inheritance disputes have the potential to tear families apart.

When parents pass away without a clear and well-organized estate plan, even close-knit siblings can find themselves at odds. In Canada, messy inheritances are increasingly common as family structures become more complex and the value of estates grows, particularly due to rising real estate prices and investment wealth. Failing to plan properly can lead to confusion, resentment and even legal battles between children—outcomes that can permanently fracture family relationships.

Here’s how a messy inheritance can strain family ties and steps you can take to prevent it:

How a messy inheritance can create conflict:

Unclear or outdated wills--If your will is unclear or hasn’t been updated to reflect changes in your financial situation or family structure, it can create confusion about how assets should be divided. Disagreements over what you “would have wanted” can quickly escalate into accusations and fractured relationships. For example, if one child receives a larger share of the estate because of an outdated will that didn’t account for financial support given during your lifetime, other siblings may feel slighted.

Unequal distributions--While it’s your right to divide your estate however you see fit, unequal treatment between children is a common source of inheritance disputes. Even if you have valid reasons for leaving more to one child—such as additional caregiving support or financial need—unequal distributions can be seen as favouritism. That can lead to feelings of betrayal and accusations of manipulation, especially if one sibling had more involvement in helping manage your finances or care decisions late in life.

Joint ownership and beneficiary designations--Assets like joint bank accounts, real estate and life insurance policies that bypass the will and go directly to a named beneficiary can cause confusion and conflict. If one child is named as a joint owner or sole beneficiary of an account, other siblings may feel excluded or believe that the decision was influenced by unfair circumstances.

Family business or real estate--Inheriting a family business or shared real estate adds another layer of complexity. If one child wants to keep a property while another wants to sell, or if a business is left to one sibling without compensation to the others, disputes can arise over valuation and fairness.

Steps to prevent a messy inheritance:

1. Create a clear and updated will

A professionally prepared and regularly updated will is the foundation of a well-organized estate plan. Work with an estate lawyer to ensure your will reflects your current financial situation and family dynamics. Be clear about how assets should be divided and address specific items like family heirlooms or properties to avoid ambiguity.

2. Communicate your intentions openly

One of the most effective ways to prevent conflict is to have an open conversation with your children about your inheritance plans. Explain why you’ve made certain decisions, especially if you’re planning an unequal distribution. Transparency can help prevent misunderstandings and reduce feelings of resentment later on. Document those discussions.

3. Use trusts to avoid probate and conflict

Trusts can be a useful tool to manage complex assets and protect your estate from disputes. A trust allows you to outline specific terms for how assets are distributed, reducing the chances of siblings arguing over intent. Trusts also help avoid probate, which can be time-consuming and expose your estate to legal challenges.

4. Appoint a neutral executor

Appointing one of your children as the executor of your estate can create power imbalances and spark resentment among siblings. Consider appointing a neutral third party, such as a lawyer or trust company, to oversee the distribution of your estateas that helps avoid conflicts over perceived bias.

5. Handle joint ownership carefully
If you hold assets in joint ownership with one child, be clear about why you’ve structured it that way and how it will impact the overall estate distribution. In some cases, it may be more straightforward to divide assets equally in the will rather than relying on joint ownership arrangements that could bypass the will entirely.

6. Review beneficiary designations

Accounts like RRSPs, TFSAs and life insurance policies are not governed by your will but instead pass directly to the named beneficiary. Make sure your beneficiary designations align with your broader estate plan to avoid conflicts and misunderstandings.

7. Consider professional mediation

If tensions between siblings are already brewing, involving a professional mediator before you pass away can help resolve disagreements and establish a path forward. Mediation allows everyone to voice concerns and helps you make adjustments to your estate plan that reflect the needs and expectations of your family.

The bottom line is messy inheritance can strain even the strongest sibling relationships, sometimes beyond repair. But with careful planning, clear communication, and professional guidance, you can minimize the chances of conflict and ensure that your legacy brings your family together rather than driving them apart.

Taking the time to organize your estate properly is one of the most valuable gifts you can leave your children and one that will protect not only your financial legacy but also the relationships that matter most.

This article is written by or on behalf of an outsourced columnist and does not necessarily reflect the views of Castanet.

Dealing with the stress of a Canada-U.S. trade war

Trade war stress

Photo: The Canadian Press/A.P.

U.S. President Donald Trump's tariffs on Canadian goods entering the U.S. could spark a trade war between the two countries..

Many Canadians have been feeling the strain of financial stress for some time now, with rising inflation, higher interest rates and an increasingly expensive cost of living.

Now, with the United States engaging in another round of trade wars, there’s an added layer of uncertainty and potential economic fallout.

While the full impact on Canada remains to be seen, these global tensions can make an already stressful financial environment feel even more daunting. With so much noise and speculation, it’s crucial to separate fact from fear and take proactive steps to manage financial stress.

Here’s what Canadians should consider right now:

What does a U.S. trade war mean for Canadians?

Trade wars create economic uncertainty, affecting markets, businesses and consumers. If the U.S. imposes tariffs on goods from key trading partners, including Canada, it could lead to higher prices, disruptions in supply chains and economic slowdowns in industries reliant on cross-border trade. Some sectors, such as manufacturing, agriculture and technology could experience more pronounced effects than others.

For consumers, that could mean more expensive goods, particularly those that rely on materials from the U.S. or impacted countries. If businesses struggle with rising costs or declining exports, job security could become a concern in some industries. On the investment side, markets tend to react strongly to trade uncertainty, leading to increased volatility.

Managing financial stress in uncertain times, so:

1. Stick to facts, not fear

The news cycle thrives on dramatic headlines and financial markets can be highly reactive. While it’s important to stay informed, be cautious about misinformation or worst-case scenario predictions that may not reflect reality. Look to credible sources of information for fact-based insights rather than getting caught up in social media panic or relying on news sources that are politically slanted.

2. Don’t let emotions drive financial decisions

Economic uncertainty can trigger fear-based decision-making, whether it’s panic-selling investments, hoarding cash or making impulsive changes to financial plans. History has shown that markets and economies go through cycles of ups and downs.

Equally damaging is selling investments domiciled in a certain country based on those same emotions, even though those investments may be far safer than the ones you choose to move to. Making long-term financial decisions based on short-term emotions often leads to poor outcomes.

If you’re feeling anxious about your investments, consider speaking with a financial professional before making any drastic moves. Staying the course with a well-diversified investment strategy is often the best approach.

3. Focus on what you can control

You can’t control global trade policies, but you can control your personal financial decisions. Now is a good time to revisit your household budget, reduce unnecessary expenses, and bolster your emergency fund if possible. Having a financial cushion can provide peace of mind in times of uncertainty.

4. Assess your job and industry risk

If your job is in an industry that could be heavily impacted by a trade war, it might be a good idea to have a backup plan. That doesn’t mean panicking but rather considering steps to improve job security or develop new skills that could make you more adaptable in a changing economy. If you're a business owner, diversifying suppliers and revenue streams could help mitigate potential risks.

5. Avoid making big financial commitments on speculation

If you’re thinking about making a major financial decision, such as buying a home, expanding a business or taking on significant debt, consider whether it makes sense based on your personal financial situation rather than speculation about the economy. Uncertainty shouldn’t automatically stop you from moving forward with financial goals but it does mean you should be especially diligent in your planning.

Should Canadians take action or stay the course?

For most people, the best course of action is to stay the course while making prudent adjustments where necessary. Panicking and making drastic changes often lead to poor financial outcomes. Instead, focus on strengthening your financial foundation, staying informed with reliable sources, and keeping a level head.

Economic uncertainty isn’t new,and while trade wars can create disruptions, they don’t last forever. By maintaining a disciplined approach to finances, staying adaptable, and filtering out unnecessary noise, Canadians can navigate this period with confidence and resilience.

This article is written by or on behalf of an outsourced columnist and does not necessarily reflect the views of Castanet.

Potential tax-saving measures seniors should be aware of at tax time

Tax tips for seniors

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As tax season approaches, it's essential for seniors to be aware of the various tax credits, deductions, and benefits available specifically to them. By understanding and utilizing these provisions, seniors can potentially reduce their tax liabilities and maximize their refunds.

I’ve written many times in the past about general tax tips and many of those tips will apply to seniors as well but here are some key tips tailored specifically (or more often) for seniors that they should be aware of:

1. Pension income splitting - If you receive eligible pension income, you may be able to split up to 50 per cent of this income with your spouse or common-law partner. This strategy can result in significant tax savings, especially if one partner is in a lower tax bracket. Eligible pension income typically includes life annuity payments from a pension plan and payments from a Registered Retirement Income Fund (RRIF). However, Old Age Security (OAS) and Canada Pension Plan (CPP) benefits are excluded from pension income splitting (but may qualify for pension sharing).

2. Age Amount Tax Credit - Seniors aged 65 and older may be eligible for the age amount tax credit, which can reduce the amount of tax owed. For each year, the maximum age amount is available to individuals with a net income below a certain threshold, with the credit being gradually reduced for incomes above this limit. It’s important to check the current year's thresholds to determine eligibility.

3. Medical expense deductions - Medical expenses can add up, and many are tax-deductible. Eligible expenses include prescription medications, certain medical devices, and premiums for private health insurance plans. Additionally, costs related to attendant care or nursing home fees may be deductible. Keep detailed records and receipts of all medical expenses to ensure you can claim them accurately.

4. Home Accessibility Tax Credit - If you've made renovations to improve the accessibility of your home—for example, installing grab bars, wheelchair ramps, or walk-in bathtubs—you may qualify for the Home Accessibility Tax Credit. This non-refundable credit allows seniors to claim eligible home renovation expenses up to a specified limit, helping to offset the costs of making homes safer and more accessible.

5. Disability Tax Credit - Seniors with a severe and prolonged physical or mental impairment may be eligible for the Disability Tax Credit. This non-refundable credit can reduce the amount of income tax owed. To qualify, a medical practitioner must certify the impairment, and an application must be submitted to the Canada Revenue Agency for approval. Once approved, the DTC can also open the door to other programs and benefits.

6. Canada Caregiver Credit - If you're supporting a spouse, common-law partner, or dependent with a physical or mental impairment, you may be eligible for the Canada Caregiver Credit. This non-refundable credit can help offset the added expenses of caregiving. The amount you can claim depends on your relationship to the person and their net income.

7. Guaranteed Income Supplement (GIS) - The Guaranteed Income Supplement provides additional income to low-income seniors receiving Old Age Security. To continue receiving GIS benefits without interruption, it’s crucial to file your tax return on time each year, even if you have no income to report. Timely filing ensures that your benefits are calculated accurately and disbursed without delay.

8. Beware of scams - Seniors are often targeted by tax-related scams. The CRA will never ask for personal information via email or text message. Be cautious of unsolicited communications claiming to be from the CRA, especially those requesting personal or financial information. If in doubt, contact the CRA directly using the contact information available on their official website.

9. Utilize free tax clinics - If you have a modest income and a simple tax situation, you may be eligible for assistance at a free tax clinic. These clinics, often run by community organizations in partnership with the CRA, can help you file your tax return accurately and on time. To find a clinic near you or to learn more, visit the CRA’s website.

10. Stay informed about provincial credits - In addition to federal tax credits and benefits, many provinces offer additional credits and programs for seniors. For example, some provinces provide property tax grants or credits to help offset the cost of property taxes for senior homeowners. Check with your provincial or territorial government to learn about any additional benefits you may be eligible for.

By staying informed and taking advantage of these tax credits, deductions, and benefits, Canadian seniors can effectively manage their tax obligations and potentially increase their tax refunds. It’s always a good idea to consult with a tax professional or financial planner to ensure you're making the most of the tax provisions available to you.

This article is written by or on behalf of an outsourced columnist and does not necessarily reflect the views of Castanet.

Understanding the challenges of strata ownership

Strata ownership planning

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More than 25 per cent of British Columbians own a strata lot, a reality often driven by affordability constraints rather than preference.

Strata properties, which include condos, townhouses and bare land stratas, offer an entry point into the real estate market but come with unique challenges many owners fail to adequately plan for.

While much attention is given to helping individuals purchase a home, less focus is placed on the financial planning needed to know when—and how—to live financially securely in or even make the decision to transition out of a strata property.

Understanding the challenges of strata ownership

Strata living requires collective decision-making, particularly when it comes to maintenance and repairs. Strata councils rely on owners to vote on key resolutions, including special levies needed to fund major projects such as roof replacements, plumbing upgrades or structural repairs. However, in many cases, these votes fail because owners on fixed or limited incomes are unable or unwilling to contribute to costly repairs.

That dynamic creates significant challenges for strata communities. Deferred maintenance leads to deteriorating property conditions, reducing the overall value of the strata lot. Owners who resist special levies often do so out of necessity, but their decisions can have long-term consequences for everyone involved.

Planning ahead: The role of depreciation reports

Strata owners have access to valuable information that can help them plan for the future. Depreciation reports, which outline the expected lifespan of a building's components and provide cash flow models for upcoming repairs, are a key tool for anticipating future expenses. By reviewing these reports (mandatory in B.C. as of 2024), owners can gauge when significant costs are likely to arise and how much they might be expected to contribute.

Unfortunately, many strata owners take a head-in-the-sand approach, choosing to ignore these reports or dismiss their implications. Emotional attachment to their homes often prevents them from considering alternatives, such as selling or downsizing. This reluctance can lead to financial hardship if a special levy is passed unexpectedly, forcing a sale at a less-than-ideal time when the property’s value is diminished due to deferred maintenance or looming repair costs.

Financial planning for strata owners

Strata ownership is not just about managing day-to-day expenses, it’s about planning for the long term. Owners who proactively engage with a financial planner can explore options and make informed decisions well before a financial crisis arises. Key considerations might include:

• Cash flow analysis: Understanding whether future special levies are manageable within the owner’s current budget.

• Downsizing: Exploring the possibility of moving to a smaller or less expensive property, which could free up equity for other needs.

• Renting or roommates: Generating additional income by renting out the strata lot or taking in a roommate.

• Family support: Discussing options for moving in with family members or receiving financial assistance from relatives.

• Assisted living: Investigating long-term care or assisted living facilities, particularly for older owners whose needs may change over time.

These conversations are critical for ensuring that strata owners maintain control over their financial and living situations. A proactive approach can help them avoid being forced into difficult decisions under duress.

The risks of waiting too long

The consequences of ignoring financial planning are significant. Owners who delay making decisions often find themselves facing reduced property values, strained finances and limited options. If a special levy is passed, those who can’t afford to pay may be forced to sell their units quickly, often at a lower price due to the state of the building or the stigma of pending repairs.

That outcome is particularly concerning for older owners, who will likely need as many financial resources as possible for medical care or assisted living. By the time they are forced to sell, they may have already lost the opportunity to maximize their equity, putting their long-term financial security at risk.

Taking action now

For strata owners, the key to financial stability lies in planning ahead. Reviewing depreciation reports, consulting with a financial planner, and considering all available options can help them make informed decisions about their future. It’s essential to move past emotional attachment and face the realities of strata living with a clear and pragmatic mindset.

Government programs and resources often focus on helping people buy their first homes. However, it’s equally important to provide support for those navigating the complexities of strata ownership.

By fostering awareness and encouraging proactive planning, we can help strata owners avoid the pitfalls of deferred maintenance and ensure they have the resources they need for the next stage of their lives.

This article is written by or on behalf of an outsourced columnist and does not necessarily reflect the views of Castanet.