I’m Not Dead Yet!

 

Q. When my Aunt Barbara died in 2002, my cousins had to rely on the legal system to help negotiate with their half-brother over her estate. To sell her personal possessions, the family had a large auction. They all agreed to keep a few things, but it was the real estate that caused a serious family squabble.

The case was settled five years later, with an agreement to allow the half-brother to purchase the real estate at a fair-market price. But everyone was left with battle scars and some hurt feelings. Sadly, their relationship was destroyed in the process.

I am concerned that the same could happen with my family. I own a home in Northern Virginia that has appreciated quite a bit and an ocean-front vacation home in Virginia Beach. The last few times the family got together, I overheard my adult children fighting over my property! I’m not dead yet. In fact, I’m in pretty good health. Sometimes, I worry what will happen when my time comes. I would hate for the kids to be at war with one another, and I don’t understand why this is even happening (they always got along so well!) How can I help prevent it, while I’m still able to do so?

A.  Many adult children and grandchildren have had experiences with their families being torn apart by an inheritance battle.

In my office, I have a plaque that reads “Where there’s a will, there’s a family fighting over it.”  Sadly, this is true much too often. Sometimes it’s over a family home, business, or vacation home. Other times, it’s over a mother’s jewelry, dad’s watches, or a rare coin collection.
Disputes over estates develop into some of the most emotionally charged cases that we see as attorneys. So, how does it all start, and how can we anticipate and avoid such problems?
Anticipating and Avoiding Conflict

Family disputes over inheritances rarely come out of nowhere. The root of many of these disputes can be jealousy, greed, thirst for control, bitterness, hatred, and hurt feelings resulting from real or perceived preferential treatment by a parent. It is especially important to anticipate conflict and, when you do, in most cases, it can be avoided.

Minimizing the risk of an inheritance war requires several actions that combine psychology, a lot of self-awareness, a good dose of common sense (and of course, an experienced estate planning attorney!) The following are 10 things you can do to minimize inheritance conflict:

1. Talk to your adult children about your estate wishes, and about any changes to them as you age. Having conversations about who’ll get what and why can eliminate surprises later and give your children a chance to process your intentions. If you think it’s appropriate to give more to the grown child who will likely be caring for you in your later years, make that wish known to all of your children, not just the caregiving child. There’s no easy way to broach the topic. It’s often best to start by saying that you’d really like to talk about a difficult subject because you believe it’s in the best interest of the family. Of course, you must also document your wishes in your estate planning documents.

2. Get input from your children. Ask if any items you own hold special meaning to them. Something as simple as a clock from your grandfather may be of much more interest to one of your children than you anticipated. It is better to have the issues surface now while everyone is still available to explain their rationale. When you decide how to distribute items of interest, it is a wise idea to include a detailed list of cherished personal property with instructions as to who should inherit each item as part of your estate planning. We always provide our clients a way to do this through what is called a Tangible Personal Property Directive. This directive can be changed by you at any time without having to change your underlying trust or will.

3. Be fair: That Barbie doll collection of yours may be worth a great deal. If possible, try to get an appraisal for anything that might have significant economic value. Being fair can also mean making sure each of your children receives a collection of items from your estate of similar monetary value, not just sentimental value.

4. Hold an open discussion on special assets:There are situations where family input is advisable. For instance, issues such as care for a handicapped child, succession of a family business, or continued enjoyment of a vacation home require parents and children to be on the same page. Read more about special assets in our blog post, “Please Don’t Leave That to Me!”

5. 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.

6. Avoid joint ownership: Joint ownership (e.g. 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 exposes the donor to the co-owner’s liabilities and limits the donor’s ability to change his or her mind in the future.

7. Leave to children equally and disinherit only as a matter of last resort: Treat children equally. Unequal allocation can be seen as a showing of favoritism that will re-activate old sibling rivalries and hurt feelings. Children have unequal needs growing up. Some will naturally receive more based on special skills (travel sports, private schools, piano lessons), or special needs (braces, glasses, special shoes, therapy sessions). However, the past is the past; don’t be tempted to leave unequally at death to account for early inequities. Also, to avoid fighting, don’t penalize successful children by leaving more to their needy siblings, or conversely, reward successful children because they are favored. Exceptions to this general rule are the truly disabled and those who would use their inheritance to further an unhealthy lifestyle of addiction or sloth. Finally, be absolutely certain before you decide to disinherit a child, as it leaves a lasting legacy of hurt and rejection.

8. Be detailed about your plans: Taking the approach that “my children will figure all this out” without your providing detailed instructions in your Estate Plan might 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.

9. Update Your Estate Plan regularlyMake 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.

10. 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.

Inheritance disputes can be explained and predicted and are to a large degree preventable. By carefully and thoughtfully planning your estate, you can 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

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