Inflation affects all consumers, but older Americans are facing an especially dramatic loss of buying power.
Make Your Estate Plan to Reduce Conflict Among Heirs
Some of your heirs, whether minor or adult, may not agree on family matters, especially when it comes to inheriting your estate. It is not uncommon for relationships to change and intensify when a person dies. This is because underlying issues that reveal themselves, creating tension over your estate and possibly tearing your family apart. Conflict resolution skills are needed to distribute your assets even if your children get along well. The settlement of an estate can be challenging even for close siblings who have never had any significant conflicts.
While you are younger and mentally fit, proactive planning can drastically reduce family conflict and infighting among your heirs. During these next two decades, vast sums of inheritable assets in the US will transfer from the Silent Generation and Baby Boomers in the realm of 30 to 68 trillion dollars to their adult children. Wealth management groups estimate that roughly 70 percent of these families will lose a sizeable chunk of their inheritance due to estate battles.
Yet sibling conflicts are not limited to money. There are always stories of heirs fighting over a piano, valuable artwork and jewelry, sentimental items, and even baseball card collections as they vie for a perceived edge of inheritance. Situations may occur where fighting families spend more on legal fees in court litigation than the actual worth of what the other heirs stand to inherit.
The easiest way to avoid infighting is to speak to your children directly to manage their expectations about your estate plan and receive their input. You can’t honestly know what your heirs prefer to hold on to once you are gone unless you ask. These family discussions need to include all heirs equally because if one heir gets a say about what they inherit, so should all.
At the same time, these conversations can be difficult because an equal division is not always possible depending on the asset. Additionally, some well-off heirs may want more sentimental items or family collections rather than cash as it might change their tax bracket. In contrast, the less well-off heirs can genuinely benefit from additional monies.
If your plan is for unequal distributions of your estate and you opt not to discuss it with your heirs while you are living, include explanatory language in your estate plan as to how you came to your decisions to help your heirs understand your goals and minimize conflict. Your estate planning attorney can also communicate to your family why being fair is not always the same as being equal.
To reduce the potential for conflict in your estate plan, do not name joint personal representatives (executors) or joint trustees. Administering probate, trusts, and your estate with just one person accountable for the final decisions in each legal entity will simplify your heirs’ interactions. Simply because an heir is the oldest or of a certain gender does not qualify them to administer your estate. In fact, all of your heirs may not be suitable to serve in these roles, in which case a neutral third party needs to be appointed.
A neutral third-party entity can be a trust company or bank that can execute your wishes without family participation in decision making. For those who worry an heir may squander generational wealth, a discretionary trust administered by a neutral third party enables you to provide for your beneficiary without worrying about the money going to waste.
Finally, keeping your estate plan updated with your estate planning attorney reduces the likelihood that an heir will contest your will or trust. Major life events like death, divorce, or remarriage require an immediate re-evaluation of your estate plans. Even if your family is not prone to conflict, managing heirs’ expectations and a sound, routinely reviewed estate plan can prevent a bitter legal battle that can tear your family apart.
We hope you found this article helpful. Please contact us at 914-498-8709 and schedule a free consultation to discuss your legal matters.