It is no secret that inheritance can cause family conflict. It is all too common for family members to disagree over how to care for an ill or elderly loved one, or who should receive what when that person ultimately passes on. Fortunately, there are steps you can take today to minimize conflict for your family in the future.
- Be proactive. Create a comprehensive estate plan while you are still healthy and able to think clearly about your future. A complete plan should include not only a will or revocable trust, but also tools designed to protect you and your family in the event of your incapacity, such as an advance health care directive and financial power of attorney. Be skeptical of online forms and do-it-yourself estate planning websites. The investment of meeting with an attorney who can evaluate your situation and work with you to develop a thorough and individualized estate plan can save you and your family money and hardship in the long run.
- Do not assume everyone will get along. Events surrounding the death or incapacity of a loved one are emotionally charged. Even families that get along very well can experience conflict. Whether to sell the family camp, what type of medical treatment you should receive, what type of funeral service should be held – there are many important decisions to be made and there will inevitably be differing opinions among those closest to you. Making your own decisions ahead of time can relieve your family of much of the fear, guilt, or stress that often contributes to family conflict. For those decisions that cannot be made in advance, name a trusted Agent who will act in your best interest. Think carefully before naming family members as co-fiduciaries who cannot act independently of one another. While such an arrangement provides for transparency, it can frustrate the decision-making process if a unanimous agreement cannot be reached. Instead, you might consider designating one individual as your Agent, but requiring that person to seek legal advice or consult other family members before making certain kinds of decisions. Alternatively, if you are hesitant about having only one Agent, you might consider designating one family member and one corporate fiduciary, such as a bank, as co-fiduciaries. There are a number of ways to structure your plan to provide protection and minimize conflict.
- Understand the effect of joint ownership and beneficiary designations. Assets that are jointly titled or for which you have named beneficiaries will not be governed by your Will or Trust but will instead pass automatically to the joint owner or named beneficiary. It is important to consider such assets in determining how your estate will be distributed and make sure that beneficiary designations coordinate with your overall estate plan. Think carefully before adding a child or other family member as a joint owner on your bank accounts for purposes of convenience. A Financial Power of Attorney may accomplish the same goals while affording you more protection and reducing the likelihood of conflict.
- Discuss your plan. Family meetings can be one of the most effective ways to prevent conflict among family members. Consider gathering your family together to explain your decisions and give your family members and intended beneficiaries the opportunity to ask questions about your plan. Eliminating the element of surprise can go a long way in preventing family discord down the road. At a minimum, explain your plan and your wishes to those who will serve as your agent during your incapacity or your personal representative or trustee after your death. Make sure they are comfortable filling the roles you hope they will assume, and be sure they understand your overall plan and what is most important to you.
- Monitor and update your estate plan as needed. Memorializing your estate plan is only one step in preparing you and your family for your death or incapacity. Life changes, and your estate plan may need to change with it. Upon any major life event – a death, a birth, a marriage, a divorce, a relocation – review your estate planning documents and consider how the event may have impacted your plan. At a minimum, review your plan every ten years. Regular review of your estate plan will maximize the benefit and minimize the conflict for you and your family.