Many parents worry that their family will argue over their Estate when they are gone. Unfortunately, inheritance can bring out the worst in family members. This is particularly so if someone feels the distribution is unfair. Following are some ways for families to prepare for this eventuality.
First, many of the hard feelings arise in the division of the personal property in the home of the deceased, even though the objects may not have any great financial value. The emotional attachments can make them priceless in the eyes of heirs. Parents should anticipate that their children will have these sentimental attachments and they should plan ahead. One way to do so is for the parents to prepare a written memorandum stating that specific items pass to specific individuals after determining by communication with their children which items are important to each of them. The memorandum is then kept with the Will and can be updated from time to time and the fact that it is in the decedent’s own writing makes it more personal for the family and more likely to be honored.
If a dispute does arise about this type of personal property, one way to resolve the dispute is to have the executor of the estate arrange for a bidding process in which the family members put dollar values on the various items involved in the dispute. If there is a significant difference in market value of objects that are left to different heirs, the Will can provide for a compensating amount of cash to make up the difference to the family member that does not receive the more valuable object.
Also important to keep disputes at a minimum is the appropriate choice of an Executor. If a parent knows that two children do not get along very well during their lifetime, it does not make sense to name them as co-executors for the Estate. A deadlock will occur and nothing will be accomplished without a Court proceeding. In such a situation, it makes sense to appoint an independent executor outside the family. Banks and trust companies often serve in this role of independent executor. Although some clients are reluctant to name a bank or trust company because of the perceived cost of hiring the bank or trust company, the cost of litigation in both dollar value and disintegration of family relationships can far exceed the cost of hiring an independent executor.
Another common cause for a family dispute after a death is the feeling that one child has that he or she is not being treated equally compared to the others. This could be the result of an actual uneven distribution of the estate provided under the terms of the Will or it could be the result of gifts made by the deceased during lifetime to one family member that are not taken into account in determining the division of the estate at death. In these situations, a Will can provide for the estate to be “equalized” by including the lifetime gifts to a child when determining the division at death.
The one most important factor in avoiding conflict is communication. Although parents are reticent about discussing money and inheritance with their children during their lifetimes, these discussions are valuable in helping the children understand and accept the decisions that are made in the Will.
One example I have experienced in my practice was a husband and wife who had a very financially successful son and two daughters who struggled to pay their bills. The parents initially told me that they planned to not provide for the son in their Wills because he had been so successful in his own right and did not need the money as their daughters did. I urged them to have a conversation with him about that decision before drafting the Wills. In my initial meeting with the parents, they stated that they felt the son would understand his exclusion in the Wills and that discussion with him was unnecessary. However, at my urging, they did proceed with the discussion. They found that their son was terribly hurt by the idea that he would be excluded from the Wills and felt penalized for his success. The parents ended up making a provision for the son’s children in the Will instead and this allowed for the son to continue having good relationships with his parents and his sisters. Had the parents surprised him with this arrangement in their Wills after their death the result could have been very different.
In summary, surprises after death can cause problems and conflict. Open communication and having an up to date Will can minimize the chances of conflict.
Stacey chairs the firm’s Estate Planning and Trusts Department and has been in private practice in the Philadelphia area for more than 20 years representing both individuals and institutions. Her practice focuses on estate planning, administration of trusts and estates, charitable giving,and sophisticated wealth preservation and transfer techniques.