Q. My children are very different, and sadly they don’t get along. My son, John, has been a PhD student for more than 10 years now. He insists that his research is going well and that he will be done soon. At the age of 45, he still lives in our basement with his wife, and their two children, because they can’t afford their own place. His wife works part-time, and my husband and I watch the grandchildren often. We have been wanting to move to our retirement home in Virginia Beach for quite some time, but have hesitated to do so because John and his family needs us.
Meanwhile, my daughter Rae and her husband are both gainfully employed, and don’t ask for a lot of help. Although they are four hours away, they drive to our house and help us whenever we really need it, because John can’t, as he is busy with his dissertation and his family. I often think Rae resents John, and have heard her say that “he is lazy” and “he is mooching off of us.”
My husband and I finally started on our estate planning. Originally, we were thinking of making John the executor because he lives with us. We were also going to give him a bigger share of our assets, because he needs it more. We were going to give Rae more of the sentimental items, because she values them highly, however I know there will be a fight over certain items. I am hoping my children will understand, but I doubt that they will. How can we do our estate planning, while minimizing strain in the family?
A. Many adult children and grandchildren have had experiences with their families being strained by issues similar to yours, including who will be in charge, who gets left what, and why one sibling might get something and the other doesn’t. This is so common, in my experience, that in my office, I have a plaque that reads “Where there’s a will, there’s a family fighting over it.”
Many of the problems of inheritance are themselves inherited. They are both genetic and acquired, but they are not inevitable. Luckily, inheritance disputes can be explained and predicted and are to a large degree preventable. By carefully and thoughtfully planning your estate, you can keep family squabbles down to a minimum.
Top 10 Actions That Can Reduce Conflict
When it comes to minimizing conflict, please keep the following recommendations in mind:
1. Leave to children equally: Treat children equally. Unequal allocation can be seen as a showing of favoritism that will cause resentment and hurt feelings. To avoid fighting, don’t penalize successful children by leaving more to their needy siblings, or conversely, reward successful children because they are favored. An exception for this rule is for children who are truly disabled.
2. Clearly identify gifts and loans: Parents often help adult children who are experiencing financial distress. It is the parent’s decision to structure these amounts as either loans, gifts, or “advancements” (an advancement means that the amount given will be deducted from that child’s share of the overall inheritance before the remainder of the inheritance is divided among the children). Unpaid loans from mom and dad can be a major source of conflict, sparking jealousies about who got more. Parents should resolve uncertainty regarding lifetime financial assistance by clearly addressing them in their estate plan.
3. Hold an open discussion on special assets: There are situations where family input is advisable. For instance, issues such as care for a disabled child, succession of a family business, or continued enjoyment of a vacation home require parents and children to be on the same page.
4. Be detailed about your plans: Taking the approach that “my children will figure all this out” without you providing detailed instructions in your Estate Plan will not lead to a harmonious distribution of your assets. While your children may not be satisfied with the choices you’ve made, they will be less likely to blame their siblings because they’ll know the allocations were what you wanted.
5. Update Your Estate Plan regularly: Make estate planning changes when there has been a change of circumstances, especially after a divorce. Additionally, estate planning should be reviewed after other life changes, such as the death or divorce of a child or the illness, addiction, or incapacitation of any beneficiary.
6. Avoid joint ownership: Joint ownership with a child (i.e., placing a child’s name as a joint owner of a parent’s asset) is an inefficient method of passing assets at death and can produce unintended and unfair results. Joint ownership also exposes the parent to the co-owner’s liabilities and may limit the parent’s ability to change his or her mind in the future.
7. Pre-arrange funeral details: Making funeral arrangements and choosing the form of interment in advance can avoid conflict and the strong emotions that such decisions sometimes elicit. For example, re-married widows and widowers should determine in advance who is to be buried with whom. Pre-planned and detailed written funeral instructions avoid controversy and angst.
8. Include a letter to your children: This letter is not to say who gets what; that should be outlined in your legal documents. This letter is to tell your children you loved them and tried your best to be fair in the Estate Planning process. It can go a long way in reminding them to move past the fact that they didn’t get the clock they wanted from your estate. Remind them in this letter that family goes a lot deeper than possessions and that you hope they will remember that fact.
9. Make logically defensible choices: Determining who is “in charge” is an emotionally loaded issue. It can be perceived as your statement as to who is the most “worthy.” Appointing fiduciaries (such as Trustees and Agents under Powers of Attorney) can also be seen as an act of favoritism and should be thoughtfully considered. Naturally you want the best person for the job to ensure that your wishes are properly carried out. However, parents must still be sensitive to their children’s emotional reactions. Children can rationalize an older sibling being appointed simply on the basis of seniority. They can also accept the naming of in-towners over out-of-towners on the basis of convenience and geographic desirability. It may be best, however, that where children are equally situated, appoint them as co-fiduciaries if they get along very well, or else consider options outside the family.
10. Consider putting someone who isn’t a family member in charge of the assets: Having a third party in charge (such as a law firm or trust company), even if they charge a fee, will eliminate the risk of creating family disharmony. Everyone may end up being mad at the third party, but at least they are not mad at each other. That may be money well spent to preserve family unity.
By using some of the recommendations above when planning your estate, you will be more likely to protect your most important legacy — your family!
Estate Planning is Important for ALL Families
We here at The Law Firm of Evan H. Farr, P.C. have strategies in place to help all types of families plan for themselves and their loved ones. With advance planning, each person, regardless of their family situation, can retain the income and assets it has taken a lifetime to accumulate and the peace of mind that their child(ren)’s needs will be adequately and properly addressed. If you or members of your family have not done your Estate Planning, or not had it reviewed and updated in the last five years, please contact us as soon as possible to make an appointment for a no-cost consultation:
Fairfax Estate Planning: 703-691-1888
Fredericksburg Estate Planning: 540-479-1435
Rockville Estate Planning: 301-519-8041
DC Estate Planning: 202-587-2797