No parent creates an estate plan with the intent to cause disagreement between their children. Still, it occurs more than people realize.
Disputes over an estate can result in lengthy and expensive litigation. Many disagreements could be avoided with forethought and better communication between a parent and the children who will be beneficiaries.
Steps to reduce friction
Ty Bernicke, a wealth manager, says when drafting a will and other estate plan components, also create a comprehensive financial overview that lists every asset, liability and insurance policy along with complete contact information for each. Usernames and passwords for accounts that your beneficiaries may need to access should be included in this overview. The aim is to eliminate as many roadblocks as possible that could delay estate administration or introduce skepticism into the process.
Speaking of eliminating skepticism, drafting a legacy letter that provides a more complete explanation why you made the decisions you did will go a long way toward reinforcing that the directions in your estate plan are true to your wishes.
Schedule a family meeting
Bernicke’s suggestions include reviewing your estate plan with all the children who will be beneficiaries once it is completed. Transparency ahead of time should eliminate misunderstandings and disputes. Siblings can use this time to discuss heirlooms, collectibles or other family items they would like to inherit, and you can explain your desire to be as fair as possible.
Discuss assets that are difficult to divide
Some assets are more difficult to divide than others. For example, it may be more important to some siblings to hold on to a lake home or cabin. Discussing potential solutions for an illiquid asset such as that during a family meeting will help eliminate disputes when the estate is being administered. Some siblings may wish to buy the others’ share a different solution may be written into the estate plan itself.
Communication is the key
Economic disparity between adult children can cause harsh feelings when assets are divided. One child may have more financial security than another. A parent has every right to divide his or her assets as they see fit in a will. Some decide to provide large gifts while they are still alive. The key, again, is to explain your decisions as much as possible.
Perhaps the most important step, Bernicke says, is to hire a knowledgeable estate planning attorney to prepare your estate plan and oversee probate.