After a loved one passes one of the biggest hurdles families face is passing wealth onto the next generation. Unfortunately, family dynamics conspire, conflict, and invite angst among descendants.
More than 2/3 of all advisors said that the hardest part of estate planning is navigating family dynamics, according to a 2019 survey. The sensitivities of simply talking about estate planning often present emotional challenges to putting a plan in place, especially when the family includes multiple marriages and blended families as well as when there are no close family members available. While simple estate planning can be very straightforward, evenly dividing a modest estate among spouse and children. Now families are not only nuclear. They come in all varieties. Here are some hints to avoid fighting over inherited wealth.
Much of the problem, experts say, stems from poor communication. A dialogue needs to be open between generations which is a two-way conversation. In most instances, the older generation needs to invite the younger generation to get the ball rolling. A lack of clarity and transparency can lead to problems. One example is a father leaving the family business to his children. Did he consider the children’s interest in the business, their individual skills, and also any sweat equity they contributed to the business prior to the passing of the business owner.
Will the plan include easily available money to help the named personal representative ( executor and/or Trustee) with legal documents to help the transition go smoothly? If the children do not want to keep operating the family business, they will need to have the power to sell. Disagreements break out among siblings if there is no plan and clear objectives between the siblings. The family can get bogged down leading to a bitter fight. Clearly, the current principal needs to talk with the heirs/children while his estate plan was being created. The children needed to be upfront and honest about their plans for the future, and the goal is to discover the disagreement and to come up with solutions to these potential disagreements before the principal/ father‘s death. The lesson: talk about your wishes and your children’s wishes while you are living.
After someone dies, they may leave behind an entire estate, with a lifetime of personal property and items such as jewelry, cars, furniture, and digital accounts which they want to give to family members. However, if these items are not specifically listed in the will, the executor or the trustee of the trust will supervise the heirs and have them decide amongst themselves who gets what. This is asking for trouble, whether the items have sentimental or financial value. In fact, sentimental items often generate the most controversy when conflicts arise. Therefore, the will or trust can leave these personal items to the Executor or Trustee to distribute it in the presence of a third party who doesn’t have an emotional attachment and is not embroiled in the family dynamics can be helpful. The decedent can give the executor or trustee guidance in the distribution in a letter that can be shared with the children or heirs to eliminate some level of disagreement.
We encourage our clients to create a separate statement naming items the executor wants each person to have. If the issue is not addressed before death, there are a few ways to move forward. An estate planning attorney who has seen many families go through this process can offer suggestions while the will is being prepared. There are facilitators or mediators who can help if things get really rocky. Appraisals of value offer clear obstacles. Heirs may wish to create a list of items that they would like to be reviewed by the executor. This option works best, if the executor is not a sibling, otherwise charges of favoritism and “mom always liked you best” can spiral into family fights, Sibling rivalry seems to emerge once the parent is no longer available to resolve the dispute. Some families group items into buckets of equal value, others set up a lottery to determine who picks first, second, etc., and some families literally roll the dice to make decisions over small sentimental items of little value. Holding up the estate while large valuable assets are frozen and wasting time while the dispute becomes more costly over time adds money and stress.
Our firm is ready to help you avoid these types of disputes with good clear planning ad advice drawn from years of experience. Contact our seasoned and trained estate planning attorneys today for help navigating these thorny issues.