It is a given that, unless you disclose your estate plan to your family before you die, you will not know the impact your decisions can have on those you leave behind. Many people do not realize that providing for uneven distributions from your estate or trust among their children can stir jealously and resentment among them that may never be resolved.
In many cases, parents can avoid creating controversy among their children by communicating their decisions and the reasons for those decisions in advance. It can be difficult to discuss such sensitive topics as the value of your assets and your reasoning in leaving more to one child than another with those closest to you. However, doing so can ensure that, whether or not your children agree with you, they will understand that it was your decision, and not blame one another after you are gone.
Some scenarios are more likely than others to cause disputes. Here are a few ways to avoid a family conflict.
Estate Planning for Family Businesses
A lucrative family business can complicate the estate planning process. One child may already work in the family business and be partially responsible for its success while another child may have no interest in it whatsoever.
If the business generates considerable wealth, you must consider how to “divide” it among your children. Do you leave it solely to the child who is already ingrained in the business to the exclusion of the other? Do you split it in half and hope for the best? Either scenario is likely to lead to disagreements between the siblings.
One option is to use life insurance to balance your children’s inheritances. You can determine the value of the business and the income it generates and then purchase a life insurance policy that pays a benefit equal to the value of the business. You can then leave the business in the hands of the child who is interested in running it and still leave an equal inheritance to your other child.
Guardianship Disputes
Unfortunately, a significant percentage of people become unable to make sound decisions at some point in time. There are many causes of incapacity. Alzheimer’s disease is at the top of the list. The Alzheimer’s Association reports 40 percent of people who are 85 years of age and older suffer from the disease.
If you do nothing to prepare for incapacity, your family may have no choice but to petition the state to appoint a guardian to act on your behalf. This can lead to disagreements among siblings concerning the person who is empowered to act as a guardian and can result in the court appointing someone you would not have chosen to fill this role.
You can avoid this outcome by proactively planning for possible incapacity. You can use a durable power of attorney or a revocable living trust to identify the person(s) you want to handle your financial affairs if you become unable to do so yourself. In the event a court ever determines that you require a guardian, you can name the person you would choose to appoint in that documents as well. Your can do the same for your healthcare decisions using a health care proxy and a living will.
Taking these steps greatly increases the chances that your wishes will be honored if you become incapacitated at some point in time. And this makes it easier for siblings to avoid disputes about your care.
If you find yourself embroiled in a dispute over a will or trust, reach out to the experienced legal team at Gaslowitz Frankel. We’ve been successful litigating trust disputes for more than three decades. Contact us for a consultation.
