How Estate Plans Can Help Family Members Avoid Legal Battles

Takeaways

• Family problems can become legal issues when a loved one needs end-of-life care or passes away, leaving an inheritance.
• A comprehensive estate plan can help your loved ones avoid family fights by addressing potential issues before they become legal challenges.
• An estate planning attorney can work with you to create a well-drafted estate plan that includes the legal documents most suitable for your unique situation and family dynamic.

The ongoing rivalries among the members of the Murdoch family or between Prince William and the Duke of Sussex may seem far from everyday reality. Yet drama, lost time, and broken relationships are a genuine problem in many immediate families, regardless of wealth. There are so many ways that family problems can become legal problems when a loved one needs end-of-life care or passes away, leaving an inheritance. Such challenges can often stem from mismatched expectations and result in serious repercussions.

Fortunately, you can take steps in estate planning to avoid potential issues before they become legal challenges.

Every situation is unique. Everybody’s family has a different mix of personalities, degrees of wants versus needs, and problem-solving skills. The American family is more complex than ever, with divorces, remarriages, committed long-term partner relationships, biological children, stepchildren, and physical distance between family members.

Here are eight scenarios where a comprehensive estate plan may be pivotal in helping your loved ones avoid a family fight down the road.

Sibling Rivalry

Tensions between siblings tend to boil over after the passing of a parent. This situation can be especially true when inheritable assets go to stepsiblings. Grief heightens emotions, and unsettled disagreements return. Estate settlement can become the battleground to settle the score of a long-time feud.

Avoid this kind of situation by appointing a professional fiduciary as your trustee. If you don’t like this option, select a family member trustee with no stake in the rivalry to mitigate its effects.

Economic Disparity Among Beneficiaries

Socioeconomic imbalances of estate heirs can destabilize the entire process. A wealthier heir may afford to hold an inheritable asset, while other heirs may want to sell for immediate financial gain. The problem can be compounded by the number of inheritors.

You can help your loved ones avoid these disputes by leaving specific instructions about the preservation or sale of real property. You may opt for “cash-out” provisions that will pay the less financially fortunate heirs the value of their stake in the real property and allow the wealthier heir to retain full ownership.

Co-Trustees

Even family members with great relationships and the best of intentions can argue over the administration of your estate. All it takes is two inheritors and one grandfather clock. Executors must move quickly and decisively to administer an estate because all inheritors are waiting for their share of the payout. Avoid this problem and name only one trustee for trust and estate settlement.

Addictions or Mental Illness

Irrational behavior that becomes part of an already sensitive situation, like your death and the settlement of your estate, can slow progress and create ill will. Any history of psychological instability or substance abuse threatens to derail an orderly process.

To help avoid family drama in situations involving chemical dependency, create contingencies for an heir to test clean for a specific time or establish a discretionary trust where a competent trustee handles access to assets on behalf of the individual with substance use disorder. In the case of mental illness, consider establishing a special needs trust or build specific provisions into your base trust. This protection permits the beneficiary to qualify for government assistance and still receive trust disbursements.

Undue Influence

End-of-life care for a parent usually falls to one child handling most of the caretaking. The uneven workload and intimate daily contact can lead the caretaker to believe they are entitled to more. They may coerce the parent to change documents for their benefit. Undue influence is more often caused by another sibling’s apathy.

Prevention may include paying close attention to the increasing susceptibility of an aging parent and using digital means (audio-video cameras, digital monitors that track health changes, etc.) to identify a parent’s stress and prevent the caregiver from influencing them for personal gain.

Late Marriage

Love knows no bounds. Late in life, people remarry and experience resentment of the new spouse by children, particularly in a blended family with children who are primarily, or only, on the decedent’s side. Upon remarrying, you may decide to place assets in your trust or modify your existing trust and will to clarify the division of assets.

Advance Benefits to One Heir and Not Others

One of your children has a financial crisis, one is starting a fledgling business, another has asked for a down payment on a home or help with college debt. You may opt to gift them the money. These scenarios are common and can strain relations during probate among heirs not receiving the same benefit.

Avoid this situation by noting in your trust terms which heir received an advance on their inheritance and how to deduct that previously received amount from your estate assets. If you don’t, some inheritors may receive a double payout, ruffling the feathers of other heirs.

Estrangement or Disinheritance

Children and other potential heirs left out of inheritance typically have nothing to lose by challenging their exclusion. This situation becomes worse in blended families, particularly if the sidelined heir pairs the challenge with a secondary claim of undue influence. You can avoid this by updating your trust and including a disinheritance clause to clarify your intent. Have an estate planning attorney insert specific language in your trust regarding disinheritance.

Work With an Estate Planning Attorney

A carefully crafted estate plan that accounts for family relationship issues is the first step to reducing potential legal challenges when administering your estate. An estate planning attorney can help you anticipate potential problems among family members and address these issues using legal strategies with clear and specific language. They also can work with you to ensure you have a well-drafted estate plan that includes the legal documents that are most suitable for your unique situation and family dynamic.

To learn more, refer to the following articles:

• How Life Insurance Is Involved in Estate Planning
• A Brief Overview of a Trustee’s Duties
• Make Sure Your Beneficiary Designations Match Your Estate Plan
• Durable Power of Attorney: A Key Estate Planning Document
• SLATs: Lock in the Current Estate Tax Exemption