Stephanie Fierro 2012-12-12 01:04:20
I am often amazed at what drives a disagreement among family members. Some of the most confounding family feuds are fueled by fights about money. Families who might otherwise avoid disputes over money and property are forced to confront those issues when a loved one passes away. The expectation of an inheritance does strange things to people. On the one hand, most of us can understand how disappointing it must be to receive only a fraction of the inheritance they were expecting and less than half what a sibling may have received. On the other hand can you really expect an inheritance? After all, it’s a gift - not an entitlement. Ultimately estate planning decisions are the client’s choice. No one can force someone to leave property to one person instead of another. Or can they? A disappointed would-be heir may start to question whether Mom knew what she was signing. Were they purposely excluded, was it a mistake . . . was it foul play? If the answers to those questions are unfavorable or simply unanswered, litigation may result. Unfortunately, as with most things, you can’t always avoid a fight. But there are ways to minimize the risk of an estate dispute. Equal Treatment If you have siblings or children you have, at some point, undoubtedly said or heard that so and so “got more than me.” When members of a generation are not treated equally it usually starts a battle. This tenet holds true whether the object of the dispute is a slice of cake or a percentage of Dad’s estate. Unless there is an objective reason for the disparity, dividing the estate equally among a client’s children (for example) may make the most sense. While it may not be a client’s first choice or final choice for that matter, there is nothing wrong with disparate treatment with or without cause. Nevertheless, clients should be counseled as to the increased potential for estate litigation under those circumstances. Intentional Omission Notwithstanding the increased risk of litigation, people often choose to exclude people from their estate plan, who might otherwise share in their estate. This exclusion may result for any number of reasons. Most of the time an heir is excluded as a result of an argument, drug addiction, dislike of that person’s spouse or simply because the grantor and the heir are not close. Whatever the reason, the estate plan documents should clearly indicate that the omission was intended. Note, however, that the reason for the omission need not be stated. His, Mine and Ours Multiple marriages and blended families can complicate the estate planning process. Unequal treatment and omissions are more likely to occur and increase the potential for a dispute. This is especially true when there are adult children of prior marriages and minor children of a current marriage. And the reason behind the disparate treatment or omission is usually benign and quite logical, e.g. the minor child will be dependent upon the estate. Where possible, you can encourage clients to provide for their adult children via another vehicle or, though certainly not required, discuss their plan with their adult children to gauge their reaction. Tangible Personal Property When it comes to personal items such as jewelry, artwork and furnishings, nothing ups the argument-ante like sentimentality. If a person who has a sentimental attachment to an item sees another heir receive it, disappointment leads to resentment and tempers flare. Clients have the ability to designate to whom each item goes which helps limit the likelihood for disagreement and dispute. Another option many older individuals choose is to gift away family treasures while they are still living. This can allow the donor to watch the recipient enjoy the item during his or her lifetime. Check Ownership People often misunderstand how they own property and which document trumps another. Legal titles and contractual designations trump estate plan documents. So, when a well-meaning child agrees to help Mom with her finances it is important to know how that child holds signing authority. Often a child is designated as a co-owner of the account rather than an authorized signatory. This presents two primary issues. One, the account may be subject to the child’s creditors. And, two, assuming that child survives her mother, that child now owns the funds in the account outright and is under no legal obligation to share the funds with her mother’s other beneficiaries regardless of what her will says. Worse - if the child nevertheless chooses to share the funds it is a gift that may be subject to tax. No Contest Whenever someone is concerned that a dispute may result the inclusion of a no contest clause is advisable. This clause states that any beneficiary who contests the validity of the will or any of its provisions will forfeit his interest in the estate. This clause really only works, however, when there is something as risk. While there is no way to guarantee that a dispute will not occur. The items above, although not foolproof, can help minimize the potential for estate litigation.
Published by Target Market Media . View All Articles.
This page can be found at http://digitaleditions.walsworthprintgroup.com/article/ESTATE+PLANNING/1257996/138452/article.html.