The Emotional Value of Assets - Hull on Estates and Succession Planning #180
Listen to: The Emotional Value of Assets - Hull on Estates and Succession Planning #180
This week on Hull on Estates and Succession Planning, Ian Hull and Jordan Atin discuss the best ways to evaluate a Will based on the emotional value of assets rather than the fixed value.
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The Emotional Value of Assets - Hull on Estate and Succession Planning #180
Welcome to
Ian Hull: Hi and welcome to Hull on Estate and Succession Planning. You’re listening to and possibly watching our podcast on Tuesday, September 8th, 2009.
Alright, well today we have the pleasure of torturing you for another podcast.
Jordan Atin: If this is torture, I’m okay.
Ian Hull: We miss Suzana but we are thoroughly enjoying our mini series with our BNN expert, Jordan Atin.
Alright, we were finishing up with a thought on valuations and I thought we should close the loop a little bit on that. And we ended our last podcast talking about your suggestions about using business models and imposing that on personal assets because it helps to sort of take the wind out of the sail of the emotions. And like you said, when you do a Will, you’re telling your children how you’d like to solve the problem. And you acknowledge that it’s hard to pinpoint a value of something that really matters a lot to them and that’s possibly a cottage or maybe a small family business or a large family business.
So we’re struggling with this whole question of valuation and how do we pinpoint the value of a particular asset that isn’t a fixed value asset. So if you don’t mind, if we could just continue that discussion for today’s podcast to wind this thought up.
Jordan Atin: Sure. Well the first thing I think about an appraisal. That, in itself, is a business decision. They are not going to take…a valuator is not going to take into account the emotional, psychological connection that one person has, what it means sentimentally to a person. It’s purely a financial arrangement. I think that is a good signal to send to your kids. At the end of the day, the Wills that we draft are business documents, right? I mean, it’s about money. And so yes, there’s a lot of emotion involved but at the end of the day, all we really have to give away is the money or the money’s worth, the cottage or the asset. And so making it more of a business structure and setting that up so that no one kid says look, we should be doing this like family members, not like business partners. But if it’s designated in the Will that this is how it’s to be done, then that takes some of that feeling away. It says okay, this is how we have to do it. It is a business decision. We’re going to deal with it that way. And however it works out; it’s going to be a business deal. And, you know, that’s not the romantic way of doing it, certainly among family members. But I think it’s the most realistic way.
Ian Hull: And it really comes down to, I think as you say, I mean you either put risk on the plan by letting it just fly and see what happens. Or control that risk by setting up parameters. And some people choose to say all my estate equally between my children, divided and we don’t particularize any way, shape or form how we’re going to do it. But if you do know that you’ve got a special asset or you’ve got special dynamics in the family which, let’s be honest, most families do and you can anticipate problems, it seems to me that overlaying a process is very important to do.
Jordan Atin: Yeah, I mean it can be read two ways by the kids. One, it could be read positively that by imposing some rules, you aren’t leaving it to be a free-for-all and creating bad feelings. On the other hand, kids can view that as mom or dad is trying to, you know, tell us what to do again and we can certainly work it out. We’re older now, we’re mature now, we can deal with it ourselves. Why do you have to tell us how to do it? So, you know….
Ian Hull: I always think it’s a great way to deflect that and that’s exactly the tension. Right? Trust the kids, let them figure it out. Or tell them how to figure it out, even when you’re dead.
Jordan Atin: Right.
Ian Hull: And what I find remarkable is, is that parents don’t…even at the very early level, don’t ask their kids how they want to do it.
Jordan Atin: Right, yes.
Ian Hull: Like, just say, do you want me to tell you how to do it? Because if you’re going to keep fighting, I’m gonna tell you how to do it. And if you don’t, and you want to just trust it, God bless you. You do it and you figure it out yourselves. But nobody wants to have that. Like even that…
Jordan Atin: Even that most basic decision.
Ian Hull: Most basic, you know, dialogue about your estate administration.
Jordan Atin: And this is where really, as estate lawyers, you’ve got to take real stock of how the family works.
Ian Hull: Right.
Jordan Atin: Because I mean leaving it…if you’ve got 3 kids, one of whom uses the cottage, two don’t and you know there’s going to be a fight or two want it or whatever, you’ve got to know that before you recommend either of the free-for-all or the imposing of a situation. And personally, I would say before imposing something, talk to the kids about it, right. Here’s how I’m thinking about dealing with it. What is your reaction?
Ian Hull: I just see so little downside because if the reaction is mixed, then you’ve answered your own question. Right? You better impose or else you’re gonna have a free-for-all.
Jordan Atin: Right. But what you see is that kids say oh, I don’t want to hear it. Don’t talk, I don’t want to hear that you’re going to die.
Ian Hull: Yeah.
Jordan Atin: Or I don’t want to seem greedy, so I don’t want to get involved and whatever you leave me is a blessing.
Ian Hull: Right.
Jordan Atin: It’s less than a blessing if it turns into a fight.
Ian Hull: Yes, that’s right. And sometimes it comes with the curse of leadership. And you have to, if you are the head or the heads of the family, you have to step up to the plate, regardless of what consequences are going to arise during your lifetime.
Jordan Atin: And sometimes you can have the best of both worlds. In other words, you give the kids…let’s take a cottage for example. You give the kids a certain period of time to work it out between themselves, with the idea that if they don’t work it out by this date, X is going to happen. We’re going to get certified appraisers, we’re going to get this and this and that. Or it’s going to get sold or something. And that, at least, says I trust you but I want to help you too. If you can’t work it out among yourselves, then we’ve got a fall-back position.
Ian Hull: That’s a really good idea, giving them that sort of cooling off period. If you guys can work it out, great. But if you can’t then a system is going to kick into place and that’s whether you like it or not. And that’s the beauty of a Will because a Will means something. It’s a document. It’s a contract and a Court will say that you have to typically follow the rules of the Will. And if one of the rules is take a breather and give it a year to figure out what you’re going to do with the cottage, but if you haven’t figured it out by then, this is what’s going to happen. The appraisers start to get sent in and all of that. There’s that tension of extra cost and so on and embarrassment that maybe as a family why you couldn’t even solve the problem amongst yourselves. All of that.
Jordan Atin: Yeah for sure.
Ian Hull: So it’s a great, great suggestion. Alright, well I think as we started off this mini, mini series on valuations, we wanted to stay clear of pretending that we were in any way, shape or form, business valuators. We should, in the future, maybe look into getting some more podcasts on that vein and maybe bring in a special guest who can give us unique nuggets on that. But what I am pleased and I appreciate you coming and doing with us today was talking about this whole idea of how the valuation process in and of itself is an important part of (a) your estate planning and (b) the administration after you die. And giving us some tools to help avoid some of the bumpy roads that could get created on that. So again, thank you very much for your time.
Jordan Atin: A pleasure.
Ian Hull: And I remind everyone that September 24th is our upcoming Hull & Hull Breakfast Series. We have 3 speakers: myself, Suzana Popovic-Montag and Megan Connolly will be speaking about general issues relating to estates. I welcome you to come to it or feel free to apply to view it on the webinar format.
So thanks again, Jordan.
Jordan Atin: Thanks Ian.
Ian Hull: I appreciate it.
Jordan Atin: Pleasure.
Ian Hull: Bye.
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