Planning to Avoid Conflict

As an estate planner, I get calls often from disgruntled beneficiaries, concerned parents, frustrated Trustees, and distrustful siblings. Death and money don't always bring out the best in families. I also spend hours in my conference room working with parents who are doing their best to avoid this kind of conflict. A good estate plan won't solve every problem or allow a family to avoid every conflict -- but a good plan can go a long way towards reducing conflict and putting conditions in place that foster good communication and respect.

Here are a few things that can help.

Have an Estate Plan and Make Sure People Know Where to Find It

If all of the necessary documents are properly drafted and completed, there will be less room for argument later. Make sure that your living trust is properly funded, holding all of your large assets, including real property. Make sure that your Will includes all of your children and clearly states your wishes concerning guardianship and the distribution of your tangible personal property. Make sure that you have a Durable Power of Attorney and an Advance Health Care Directive so that you can be taken care of should you become incapacitated. Make sure that your retirement assets have the right beneficiaries named. If you have executed multiple amendments to documents, make sure that the original and all of the amendments are filed, and stored, together. If you've given copies of your estate plan to siblings or children, make sure that they have the most updated versions of these.

Make a list of your life insurance policies and retirement accounts that are not held in your trust, and keep this list with your estate plan, updated regularly.

Make a list of your digital passwords and accounts and keep this list up to date as well.

And although this sounds obvious, make sure that people know where to find your plan. If it's in a safe deposit box at the bank, which bank? Which box? Where do you store your key? If it's in a safe at home, where is that safe? Who has the combination or the key?

Be Fair, Whatever That Means to Your Family

Being as fair as possible is the goal of most people. But being equitable and being fair aren't always the same thing. If one child has medical needs that are greater than another, maybe it makes more sense to leave that child more of your assets. If one child has six of your grandchildren and teaches elementary school, while the other has an only child and is a high-tech millionaire, it might not be 'fair' to leave your estate to both equally. As an estate planner, I try my best to listen closely to my clients and understand their goals so that I can assist them in identifying their intentions and honor their own values. Whatever a couple decides to do, a good estate plan should be crystal clear about what that is. If possible, a good estate plan can even explain itself, so that Trustees, executors, and beneficiaries can honor and respect the choices that the couple made.

Avoid Surprises, If Possible

I advise clients to at least consider discussing their estate plan with their children. No one likes surprises after a death, especially if they were counting on an inheritance that they're not getting. At the same time, not all parents want to discuss their plans with their children, and they are not obligated to do so. Even so, if you are not planning on dividing up your estate equally, or want to give a particular asset (like your Tahoe cabin) to one child alone, or want to entirely disinherit your child who is involved in a cult, it may be worthwhile to let that be known beforehand.

Think About How to Distribute Personal Assets

The distribution of tangible personal property can sometimes be a real source of conflict in a family. I've seen families erupt into feuds over lawn mowers, tools, jewelry and old paintings that have no monetary value but lots of sentimental value. I counsel clients to consider specifying how disputes over such things should be resolved (by lottery; by the executor; by a vote; by a draw), to give things away during life instead (one client had post-its on the back of everything in her house, including an antique lemonade pitcher), or to consider leaving behind a letter detailing specific gifts of such tangible property.

Consider Your Executor and Trustee Carefully

The person that you choose to distribute your estate has to be a diplomat, especially if sibling rivalries are going to come to the fore after the death of a parent. Consider the dynamics of your adult children and be realistic about how they get along now. One couple that I worked with chose one daughter, who was an efficient attorney, to serve as co-Trustee with her brother, who had the gift of making all of his siblings calm down. After the parents died, the co-Trustees worked together in an unconventional, but effective way -- the daughter/attorney did virtually all of the legal and logistical work, while her brother skillfully worked with her to dissuade her from certain courses of action that he felt (rightly) would cause tension in the family. Just as the parents had predicted, the work got done and the family managed to get along. Had they named just the daughter, the trust would have been distributed efficiently, but no one would have gotten along; had they named just the brother, it might have taken years to get anything done at all.

If you or any of your friends has questions or concerns about potential family conflict around their estate plan, feel free to get in touch or share this article with them.