Effective Estate Planning to Avoid Estate Litigation
By Ronald Fatoullah, Esq. and Stacey Meshnick, Esq.
When engaging in estate planning, it is important to take steps during your lifetime to avoid estate litigation after your death. All families have a mix of different personalities, needs, desires 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.
Rivalry among the wealthiest members of society may seem far from everyday reality. Yet drama, lost time, and broken relationships are a genuine problem in many families, regardless of wealth. There are 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, resulting in serious repercussions.
The following are just some of the scenarios in which a comprehensive estate plan may help you and your loved ones avoid a family fight down the road.
Tensions between siblings tend to escalate after the passing of a parent. This is especially true if assets are left to stepsiblings. Grief heightens emotions causing unsettled disagreements to resurface. The battleground for settling the score of a long-time feud can become estate litigation. You can help to avoid this kind of situation by appointing a professional fiduciary as your Trustee. In the alternative, select a family member Trustee with no stake in the rivalry.
Socioeconomic imbalances of estate heirs can destabilize the entire process. A wealthier heir may be able to afford retaining an inheritable asset, while other heirs may want to sell immediately. The number of beneficiaries can compound the problem. You can help your loved ones avoid these disputes in advance by leaving specific instructions in your Will/Trust 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 share in the real property in cash and allow the wealthier heirs to retain full ownership of the real property.
Even family members with great relationships and the best of intentions can argue over the administration of your estate. Executors must move quickly and decisively to administer an estate because all beneficiaries are waiting for their share of the payout. This problem can likely be alleviated by naming only one fiduciary (Executor/Trustee).
Irrational behavior that becomes part of the already sensitive situation of your death and the settlement of your estate can slow progress and create ill feelings. 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 Trustee has 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 building specific provisions into your base Trust. This protection permits the beneficiary to qualify for government assistance and still receive Trust disbursements.
End-of-life care for a parent usually falls to one child who handles most of the caretaking. The uneven workload and intimate daily contact can lead the caretaker to believe that they are entitled to more. The child may coerce the parent into changing documents for its 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 imposition of undue influence for personal gain.
Love knows no bounds. Late in life, people remarry and experience children’s resentment of the new spouse, 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.
If one of your children has a financial crisis, one is starting a fledgling business, and another has asked for a down payment on a home or help with college debt, you may opt to give them the money during your lifetime. These scenarios are common and can strain relations among beneficiaries during probate/Trust administration. Avoid this situation by noting in your Will/Trust the terms under which the beneficiary received an advance on their inheritance and how to deduct that previously received amount from your estate assets. If you don’t, some beneficiaries may receive a double payout, ruffling the feathers of other heirs.
Children and other potential excluded heirs 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 assist in addressing this by updating your Will/Trust to include a clause clarifying your intent. Your estate planning attorney can insert specific language in your Trust regarding disinheritance should the Trust or Will be challenged.
A carefully crafted estate plan that accounts for family relationship issues is the first step to reducing potential legal challenges when administering your estate. The elder law and estate planning attorneys at Meltzer, Lippe, Goldstein & Breitstone, LLP 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.
Ronald Fatoullah, Esq. Chairs the firm’s Elder Law Practice Group and is a Partner of the firm’s Trusts & Estates Practice Group. Stacey Meshnick, Esq. is a member of the firm’s Trusts & Estates and Elder Law Practice Group.
This blog posting is for informational and educational purposes only. It is general in nature and not person or circumstance specific. This blog posting is not intended nor should it be construed as rendering independent investment, legal or tax advice. It may but does not necessarily constitute attorney advertising.