Preventing Family Conflict And Disputes Over Your Estate Plan
No matter how well you think you know your loved ones, it’s impossible to predict exactly how they’ll behave when you die or if you become incapacitated. No one wants to believe that their family members would ever end up fighting one another in court over inheritance issues or a loved one’s life-saving medical treatment, but it happens more often than you think.
Family dynamics are complicated and prone to conflict even during the best of times. But when tragedy strikes a member of the household, even minor tensions and disagreements can explode into bitter conflict. And when access to money (or even quite often, sentimental items of furniture or jewelry) is on the line, the potential for discord increases. Ultimately, there is no greater cost to families than the cost of a lost relationship after the death or incapacity of a loved one.
You can dramatically reduce the chances for conflict in your family by working with an experienced estate planning lawyer who has seen it before, and who understands and can anticipate potential pitfalls. In fact, preventing family conflict is one of the primary reasons to work with an estate planning lawyer to create a thorough estate plan; it's better than relying on a do-it-yourself internet download. Even the best internet document could never anticipate and navigate intangible dynamics and emotional matters—but after a Family Wealth Planning Session, we can discuss those issues and brainstorm a plan, together.
By becoming aware of some of the leading causes of conflict over your estate plan, you’re in a better position to prevent those situations through effective planning. Though it’s impossible to know exactly how your loved ones will react when your plan is needed, the following issues are among the most common catalysts for conflict.
Poor Fiduciary Selection
Many estate planning disputes occur when a person you’ve chosen to handle your affairs following your death or incapacity fails to properly carry out his or her responsibilities. Whether it’s the agent you named in your power of attorney, your personal representative, or your successor trustee, these roles can trigger a variety of duties, some of which may last for years.
The individual you select, known as a fiduciary, is legally required to fulfill those duties and act in the best interests of the beneficiaries named in your plan. The failure to do either of those things can result in a breach of fiduciary duty.
The breach can be the result of the person’s deliberate action or something they do unintentionally or by mistake. Either way, a breach—or even the perception of one—can cause real and understandable conflict between your loved ones. This is especially true if the fiduciary attempts to use the position for personal gain or if the improper actions negatively impact the beneficiaries.
Common trustee breaches include failing to provide required accounting and tax information to beneficiaries, improperly using estate or trust assets for the fiduciary’s personal benefit, making improper distributions, and failing to pay taxes, debts, and expenses owed by the estate or trust.
If a suspected breach occurs, beneficiaries might consider suing to have the fiduciary removed, may demand recovery of damages incurred, and could ask for punitive damages if the breach was committed out of malice or fraud.
Solution: Given the potentially immense responsibilities involved, you should select your fiduciaries with care and make sure everyone in your family knows why you chose the person you did, and that the person you choose knows how to do the job—and do it well. You should only choose the most honest, trustworthy, and diligent individuals, and be careful not to select those who might have potential conflicts of interest with beneficiaries.
It’s crucial that your estate planning documents clearly spell out a fiduciary’s responsibilities so they understand exactly what’s expected. And should things go awry, you can add terms to your plan that allow beneficiaries to remove and replace a fiduciary without going to court.
During your Family Wealth Planning Session, we can talk through your own family's dynamics and help you with select the most qualified fiduciaries; draft precise, explicit, and understandable terms in your planning documents; and ensure that your family understands your choices to help allay conflict when it’s too late. In this way, the individuals you select to carry out your wishes will have the best chance to do so successfully—and with as little conflict as possible.
Contesting The Validity Of Wills and Trusts
If the validity of your will and/or trust is contested in court and the contest is successful, the court could declare your will or trust invalid, which effectively means the documents never existed in the first place. This could be disastrous for everyone, especially your intended beneficiaries.
Merely disagreeing with the way you distribute your assets in your will or trust doesn’t give a person grounds to contest your documents. Whether or not the individual agrees with the terms of your plan is irrelevant—it is your plan after all. Rather, a person must prove that your plan is invalid (and should be thrown out) based on one or more of the following legal grounds:
The document was improperly executed (signed, witnessed, notarized) as required by state law;
You did not have the necessary mental capacity at the time you created the document to understand what you were doing;
Someone unduly influenced or coerced you into creating or changing the document;
The document was procured by fraud.
Not just anyone can challenge your plan, only those with “legal standing” can contest your will or trust.
Just because someone was intimately involved in your life, even a blood relative, doesn’t automatically mean they can legally contest your plan.
Those with the potential for legal standing generally fall into two categories: 1) family members who would inherit—or inherit more—under state law if you never created the document, and 2) beneficiaries (family, friends, and charities) named or given a larger bequest in a previous version of the document.
Solution: There are times when family members might contest your will and/or trust over legitimate concerns, such as if they believe you were tricked or coerced into changing your plan by an unscrupulous caregiver. However, that’s not what we’re addressing here.
Here, we’re discussing contests by disgruntled family members and/or would-be beneficiaries seeking to improve the benefit they received through your plan. This could include disputes between members of blended families, particularly those that arise between spouses and children from a previous relationship.
Working with an experienced lawyer is important if you have one or more family members who are unhappy—or who may be unhappy—with how they are treated in your plan. This need is especially true if you’re seeking to disinherit or favor one member of your family over another.
When a plan benefits some children more than others or benefits friends, unmarried domestic partners, or other individuals instead of, or in addition to, your family there is a potential for conflict. Conflict is also likely when you name a third-party trustee to manage an adult beneficiary’s inheritance to prevent them from being negatively affected by the sudden windfall.
In these cases, it’s vital to make sure your plan is properly created and maintained. One way you can do this is to include clear language that you are making the choices laid out in your plan of your own free will, so no one will be able to challenge your wishes by claiming your incapacity or duress.
Beyond having a sound plan, it’s important to communicate your intentions to everyone affected by your will or trust while you’re still alive rather than having them learn about it when you’re no longer around. Sometimes it's a good idea to have a family meeting where you go over everything with all impacted parties.
Blended Families Increase Likelihood For Conflict Other than contests originated by disgruntled loved ones, the potential for your will or trust to cause dispute is increased if you have a blended family. If you are in a second (or more) marriage, with children from a prior relationship, your children and spouse often have conflicting interests, which can lead to conflict.
Solution: To reduce the likelihood of dispute, it’s crucial that your estate plan contain clear and unambiguous terms spelling out the beneficiaries’ exact rights, along with the rights and responsibilities of executors and/or trustees. Such precise terms help ensure all parties know exactly what you intended.
Additionally, if you have a blended family, you should meet with all affected parties while you’re still alive (and of sound mind) to clearly explain your wishes directly and with clarity if you hope for your loved ones to love each other after you are gone. Sharing your intentions and hopes for the future with your new spouse and children from a prior relationship is hugely important to avoid disagreements over your wishes for them When it comes to inheriting your estate, your new spouse and your children from a prior marriage have conflicting interests. For one, if your new spouse inherits everything you have when you die, your children from a prior marriage could receive nothing when your new spouse dies unless you’ve planned in advance to ensure your assets are held in trust for your new spouse to be used during his or her life and then stipulated that the balance should mandatorily pass to your children upon your spouse’s death.
But that creates yet another potential problem. Your new spouse may choose to invest the assets conservatively to ensure they have enough money to live comfortably for a few more decades instead of investing assets for growth for the benefit of the next generation. The children—particularly if they are younger—might be better off having the assets placed into higher-risk investments, which can offer better returns in the long run, but leave less income for the surviving spouse. One way to catch this issue ahead of time is to name a neutral third party as successor trustee, so both the children and surviving spouse’s interests can be balanced fairly.
Prevent Disputes Before They Happen
The best way to deal with estate planning disputes is to do everything possible to make sure they never occur in the first place. This means working with an estate planning attorney, like us, to put planning strategies in place aimed at anticipating and avoiding common sources of conflict. It means constantly reviewing and updating your plan to keep pace with your changing circumstances and family dynamics.
Whether the potential dispute arises from disgruntled heirs, sibling rivalries, or the conflicting interests of members of your blended family, as your Personal Family Lawyer®, we can help you predict and prevent such conflicts. Meet with us today to learn more.
This article is a service of Rayboun Winegardner, Personal Family Lawyer.® We do not just draft documents; we ensure you make informed and empowered decisions about life and death, for yourself and the people you love. That's why we offer a Family Wealth Planning Session,™ during which you will get more financially organized than you’ve ever been before and make all the best choices for the people you love. You can begin by calling our office today to schedule a Family Wealth Planning Session and mention this article to find out how to get this $750 session at no charge.