A generation of baby boomers is preparing to transfer billions in money and property to their survivors — but also toxic debts and inheritances.
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Many families are ill-prepared and conflicts arise with close relatives, banks and governments.
The Journal met heirs and notaries who tell their inheritance stories:
· He tries to preserve the inheritance left by his sister, but a bank puts obstacles in his way;
· Thirteen years after her partner’s death, she continues to manage his estate and tells herself that without a will she would have lived a nightmare;
· He spent three years taking legal action to challenge a false will.
According to the Quebec Statistics Institute, families in Quebec have financial and real estate assets worth $2,400 billion. A significant portion of this treasure will soon be bequeathed to loved ones.
“I’ve been in the industry for five years and files have been flying over my head ever since I started. And it’s nothing yet, it’s going to get worse. We haven’t reached the top of the pyramid yet,” says Marie Madelin, an inheritance lawyer in Montreal. “Today’s inheritance law is like divorce law a few years ago, when the number of divorces exploded. With the aging population, we are at a turning point. “The older generation almost all have a house and it is an asset that is currently worth a lot of money,” she says.
Dealing with emotions
Inheritance files are sometimes extensive and complicated. Some files can take two to three years, the lawyer emphasizes. When the will is opened, things may turn out completely different than the family expected. There are “poisoned” inheritances in which the deceased leaves behind mostly debts – and a lot of trouble. Sometimes it takes too long for the succession to take place without the heirs understanding why. Sometimes it is the insolvency administrator, usually a family member, who abuses his power.
“These are interactions between people from the same family. And the day we stand in front of a lawyer in a family, something is wrong,” explains the woman who, in another life, worked in marketing for L’Oréal for ten years. “There are all kinds of temperaments and cases. You have to be in solution mode and bring everyone to the table,” she says.
- Listen to Yves Daoust’s economic contribution where he talks about family conflicts arising from inheritance
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Marie Madelin may have to deal with files for a long time. According to Manulife, more than 40% of millionaires in Canada are aged 65 and over. This is the fastest growing group of high net worth customers, growing 20% over the last five years. And it is expected to double in size in the next decade.
“I could work overtime every day if I wanted, but I’m also a mother of three. We have to know when to stop if I don’t want my children to end up in the same situations as too quickly [celles que] I can do it,” she concludes jokingly.
Inherited debts
In Quebec, there are billions of dollars in wealth in homes, RRSPs and other savings that will be passed on to heirs. But there is also debt. Lots of debt. According to the Quebec Statistics Institute, Quebecers have $305 billion in debt, mostly mortgages. And part of it will be left to the heirs as an inheritance. What to do if the inheritance is “poisoned”?
Jocelyne Sequeira is a notary. She specializes in “deficit” estates, meaning wills that include more debts than assets.
“Inheriting debt is a common occurrence. Heirs come to me who, for example, had no contact with their father. So you make a summary of what he owns and find that the value of the estate is in deficit. So instead of collecting debts, they will choose to forego the inheritance,” she explains.
You can say NO
That’s the good news. If you have a lot of debt to your parents, you have the choice to say no. And the creditors, like the banks, have to look after themselves.
“For example, if there is a hundred dollars in the deceased’s account and $5,000 on the credit card, the heirs will forego it, I see such cases often,” she explains.
According to the law, you have six months to take stock and accept or reject the inheritance, she says.
Out of love for the deceased
However, there are cases in which the children accept the inheritance even if there are debts.
“It could be out of affection for your parents, respect for their memory and their name,” says Jocelyne Sequeira. It is the choice of the legatee. There are some who come to me and say: “You know, he is my father, he gave us a lot, he was always there for us, so we will be there for him until the end.” In memory of their parents some will take on the debt,” she says.
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