Inheritance can be a mixed blessing, especially when it involves complex assets. In Canada, certain types of property can create unique challenges for heirs.
Real estate
While real estate is a valuable asset, it may come with maintenance expenses and management responsibilities you may or may not be prepared for.
Further, vacation homes or rental properties can be susceptible to capital gains taxes upon the deemed disposition at death. It’s important to consult a tax, financial or legal professional to navigate potential tax liabilities and the application of the principal residence exemption, if appropriate.
Items with sentimental value
If you inherit items with sentimental value, emotions often run high. Jewellry, antiques or family heirlooms may not have a high monetary value, but their emotional worth is immeasurable.
Appraising these items can be challenging because their market value may not reflect their significance to you or your family. Also, deciding who gets what can lead to disputes when multiple heirs are involved.
Business interests
Inheriting a business brings a different set of challenges. You may suddenly find yourself in a partnership with other stakeholders or in a position to run a company without prior experience. Navigating relationships with co-owners, employees, and customers can also prove to be challenging, as can the potential for significant expenses, like tax liabilities.
Inheriting a business can change a person’s life, and it may require professional valuation and legal advice to ensure a smooth transition and address potential conflicts among the involved parties.
Collectibles and collections
Collections, from art to stamps to vintage cars, present their own unique hurdles. First, there’s the task of appraising the collection, which can be difficult if the items are rare or the market for them is niche.
Once the value is established, questions can arise regarding whether to divide the collection among heirs or sell it to settle the estate. Transporting and storing a large or delicate collection adds another layer of complexity. Beneficiaries may need to work closely with appraisers, auction houses or other professionals to manage these assets appropriately.
Dealing with difficult property
Whether it’s property, personal keepsakes, a family business, or a prized collection, inheriting these assets can lead to complications and unexpected challenges during and after estate administration.
Emotional support from family, friends, or professionals can help during this sensitive and challenging time. And understanding the logistical, legal, and emotional aspects of inheritance can help ensure a fair and respectful outcome for all involved.