Doane & Doane not only represents trustees and personal representatives who are named in the estate plans that we have prepared, but our firm also works on behalf of clients who are involved in estate administration and litigation cases for estate plans that Doane & Doane did not create. In the course of those representations, we have come to see that disputes over an estate arise more frequently when a certain set of factors are present.
Of course, there are some factors that are completely out of a person’s control. For one, if the beneficiaries of your estate simply do not get along well, or are prone to filing lawsuits, then the chances of an estate dispute arising are higher. Also, the disputes tend to be consistent with the size of the estate. If an estate has a significant amount of assets, the potential for disputes also becomes more significant.
So, notwithstanding those life circumstances that you cannot control, there are a few tips within your control that you can employ now so that you can minimize disputes among beneficiaries in the future. Given Doane & Doane’s experience with such matters, here are 10 steps that you can use in your estate planning that will help avoid family inheritance disputes.
1. Do Not Wait to Think About Estate Planning
The best time to do your estate planning is when you are healthy, feel that you have a long future on this planet, and you are of sound mind.
Why is that so? If you wait until you fall ill to do your estate planning, then two things could happen. First, you may never get it done. Depending on your health, you may not have the time or resources to focus on estate planning when you need to get better.
Second, the closer to end of life you get before creating an estate plan, the more opportunity there is for beneficiaries, or other third parties, to challenge whether you had the mental capacity to legally execute a will, trust, or other estate document. Of course, there is no problem with making changes in your estate plan later in life, but it is important to be extra careful to establish the validity of those changes as you get older.
2. Be Sure to Plan Your Estate with the Help of an Experienced, Objective Attorney
There are two advantages to working with an experienced estate planning attorney who is independent of your family and friends.
First, an attorney with a specific background in estate planning can provide effective, efficient advice that minimizes legal costs and maximizes clarity in your estate documents. Remember, the less ambiguity, the more your intentions will be followed to the letter.
Second, having an attorney who is independent, will minimize the chance of any claim that your estate plan was improperly influenced, or coerced, by a beneficiary.
3. Be Careful in Your Choice of Personal Representative or Trustee
You want to take some time to think carefully about the choice of a personal representative in probate, or a trustee for a trust. You want to make a choice that minimizes conflict between fiduciaries and beneficiaries. With a trust, it might be a good idea to have a co-trustee to lessen the possibility of conflict. However, make sure that such an appointment will not inadvertently create more conflict.
4. Try to Avoid Probate with a Revocable Trust
Funding a revocable trust with the assets of your estate will normally keep your estate out of probate. That is a good thing because the probate process tends to allow a forum for conflict.
While disputes can also be made against a trust, without the types of notice and rights given in probate court, administering a trust more likely avoids beneficiary disputes.
5. Equal Distribution or Explain
In most cases, calling for equal distribution to children will minimize conflict. Yet, you may want to provide a greater inheritance to one beneficiary over another. In order to do that while still keeping conflict at bay is to draft a separate letter, in your own words, about the reasons for the difference in treatment. Also, managing the expectations of loved ones ahead of time about inheritance will also lessen the chance of disputes down the road.
6. Dividing Non-Monetary Assets
It is relatively easy to split a bank account, or even the proceeds of a real estate sale. However, when it comes to family heirlooms, and keepsakes, try to plan ahead. In general, it is recommended that you have a candid conversation with your beneficiaries about their wishes and expectations regarding jewelry and such. Also, be sure to put your wishes in writing. Oral promises tend to have a way of creating conflict.
7. Deal with Lifetime Gifts
You may have made loans to family, or help a child with the purchase of a business. Be sure to write down your wishes on how to dispose of those debts in connection with the inheritance for that beneficiary.
8. Handle Joint Ownership Decisions
If you jointly own property or a bank account with a child, you need to be aware that the asset will automatically be wholly owned by your child when you pass away. Think about whether you want that to be the correct result. If not, consult your attorney to make sure that your wishes are properly documented.
9. Don’t Forget Beneficiary Designations
On your IRA, life insurance policies, and other financial instruments, you most likely needed to designate a beneficiary. Make sure that those designations are consistent with your trust or will or other documents about how your estate will be distributed.
10. Return Back to Your Estate Plan Periodically
Once you have created an estate plan, you can sit back and rest easy that you have planned appropriately for the future. But, as life goes on, things change. So, every few years or so, be sure to return to your estate planning so that your wishes are consistent with your family’s current affairs.
Battles over celebrity estates usually provide good fodder for headlines. Also, you may have heard stories about other contentious estate disputes. Most times, those disputes could have been easily avoided through thoughtful planning and choices designed to avoid family disputes.
Let Doane & Doane Help with Your Estate Planning
At Doane & Doane, we have the resources and experience with estate planning issues to help you. If you think it is now time to get started on your own estate plan, give us a call. Our advanced estate planning lawyers are ready to assist you and get you that peace of mind you need. Call Doane & Doane today for more information at 561-656-0200.