10 Tips for Avoiding Family Disputes in Estate Planning
A belated Happy New Year! I recently did a presentation on avoiding family disputes in estate planning and thought I would share an overview with some of the tips I discussed.
Tip #1: Start with the Planning Process. Any comprehensive planning process starts with identifying your goals. What do you want to accomplish in your estate planning? Are you concerned about family disputes? Tax concerns? Keeping property in the family? Making gifts over time to children or grandchildren? If you don’t identify your goals it is difficult to make a plan that will meet your needs.
Tip #2: Don’t Delay. Don’t wait for an emergency or an illness to create an estate plan. The best time to create a plan is when you are healthy and in a good frame of mind to make decisions. This also helps avoid a suggestion that you made a plan under duress or lacked capacity.
Tip #3: Choose Representatives Wisely. Choose personal representatives/administrators/trustees who are suited for the role. This does not always mean choosing your oldest child or your nearest sibling. Choose people who are willing to do the job, are organized, and generally geographically available. If using two co-representatives, plan for how they should handle situations where they don’t agree.
Tip #4: Be careful about joint wills. I think joint wills (one will for a married couple) becomes a problem unless both people pass at the same time. I will do mirror/reciprocal wills that allow each spouse to have their own will to be probated at the passing of each spouse.
Tip #5: Address different treatment. For example, if you have multiple children and are not making “equal” gifts, consider having a difficult conversation with those individuals and explain why there are differences. It is your property to distribute how you choose, but some of the main reasons for disputes are when family members are surprised or hurt. Try to avoid that by having the hard conversation now.
Tip #6: Be specific about your personal effects. Whether or not your personal property has a high monetary value, be specific about its distribution. For example, don’t leave it up to your children to divide your jewelry after you are gone. Choose the items you want each person to have, and identify those items in your will or trust.
Tip #7: Be careful about joint ownership during your lifetime. For example, adding a child to a bank account or a deed may create the presumption of a gift. Make sure that is what you intended and also that it matches your estate planning documents.
Tip #8: Require receipts and releases for beneficiaries of trusts. Trusts are generally not overseen by courts and are left to the trustee to distribute property. Require beneficiaries to acknowledge the property they received (receipt) and releasing the trust from additional obligations for a smoother distribution process.
Tip #9: No Contest Clauses. Consider the use of “no contest” clauses and/or required alternative dispute resolution in your estate planning documents. This may not eliminate all disputes but may make it more likely for your wishes to be carried out as you intended.
Tip #10: Keep your documents updated. Creating your estate plan is a major step. As life circumstances change with births, deaths, marriages, divorces, and property changes, it is important to keep your documents updated. I suggest reviewing your documents on an annual (or at least every few years) basis and address any needed changes.
Finally, make sure your documents are in a safe (but accessible) place. If no one can find your will or trust, your thoughtful planning will have been wasted and your family will have to move forward using the state formula and procedures for people dying intestate (without a will).
If I can help you with your planning needs, please contact my office to schedule a consultation. Best wishes for a healthy and happy 2018!
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