10 Tips for Avoiding: Inheritance Disputes Over Family Heirlooms
Inheritance disputes can be explained and often predicted and are to a large degree preventable. By taking the time to carefully assist your client with their estate distribution plan, the client can provide a peaceful transition for those left behind. Wealth planning professionals who counsel individuals about family feuds and personal conflicts that arise during estate settlements usually agree that most could be solved without attorneys if people would just listen to one another, communicate, and “Do unto others as you would have them do unto you.” However, that’s easier said than done. Here are ten recommendations to consider when advising your clients:
“How to Handle Inheritance Disputes Over Family Heirlooms”
by Francis Burton Doyle, Esq. WealthPLAN & Mary G. Anderson, Program Manager, Advanced Legal Training Institute
- Advise your clients to update and review their estate plan annually.
Whenever there is a birth, death, divorce, etc. in the family—take some time to review your beneficiary designations.
- Advise your clients to create a separate “Personal Property Memorandum” to add/update property distribution.
Encourage your clients to create a separate list of their cherished personal property, collections, antiques, art, etc. with instructions as to who should inherit each item. The list should be of sufficient detail to effectively describe each item being gifted and why. Be sure that this list/document is signed and dated and as appropriate have your client consider gifting certain items while they are alive.
- Advise your clients to consider holding an open discussion with your heirs regarding any unique assets.
There are special situations where it is advisable to bring the family together to discuss the succession plan of the family business, shared equity of a vacation home, boat, etc. It is important to have family members hearing the client’s wishes as one unit.
- Clearly identify gifts and loans.
Parents often help adult children who are experiencing financial distress. It is the parent’s prerogative to structure such advances as either loans or gifts in their estate planning documents.Unpaid loans from Mom and Dad can be a source of conflict, activating jealousies about who got more. Parents should resolve uncertainty regarding lifetime advances by addressing them in their estate plan.
As most parents know, children often have unequal needs growing up. Some will naturally receive more based on special skills (travel sports, private schools, piano lessons), or special needs (braces, glasses, special shoes, or schooling). However, the past is the past; help your client to not be tempted to leave unequally at death to account for early inequities.
It’s important not to penalize successful children by leaving more to their needy siblings, or conversely, reward successful children because they are favored. Exceptions to this general rule are the truly handicapped and those who would use their inheritance to further an unhealthy lifestyle of addiction, etc.
- Plan to have an up-to-date household inventory (with photos) available for the heirs to assist with the division process.
To begin, it is recommended that nothing be removed from the home or property before the official division process occurs. Predetermining future ownership of every item can be a daunting task. Many who have tried have realized that it can be nearly impossible. Ironically, it is often insignificant items that cause the biggest family disputes, not larger or more valuable items.
Often items of little monetary value have great emotional significance. This can make distribution difficult when more than one person feels attached to a particular item. The process can also become the venue for playing out old family insecurities and grievances. Everyone may revert to the relationships they had as teenagers. Encourage your clients to plan ahead and make their wishes known!
- Blended families may present a challenging set of circumstances.
Every married person with children should consider the possibility that one day something unexpected might happen to them, and that eventually the surviving spouse might remarry. In contemplating that situation, each spouse should consider what property (furniture, jewelry, china, special keepsakes, etc.) they want to be sure ends up belonging to their children, not sold or given to stepchildren whom they do not know. - Protect yourself and your heirs.
Most attorneys will recommend the use of a prenuptial agreement for a second marriage. Be certain to define what assets existed at the end of the divorce and clearly state how new assets that accumulate during the second marriage are to be owned between the client and the new spouse. - Develop a transition plan for the family business.
Ideally a family business should pass to those family members who have been active in the business and who are instrumental to its future success. The fragile nature of businesses requires that there be a smooth transition from one generation to the next. A seamless transition requires the gradual passing of the torch while parents are alive. Parents should groom their successors by gradually transferring responsibility and authority to their successors over time. - Get help if needed with a fair distribution of assets, don’t wait. Where there are conflicts among family members over particular items, often estate attorneys act as mediators, but your clients can also go to a trained mediator. Mediation can help the family members get at the root of the interests with the process, healing past wounds rather than exacerbating them. In many cases, families use a combination of these methods to come up with a fair system of distribution. Sometimes, however, people’s schedules get in the way of everyone meeting in one place to make distributions or the process gets dragged out for other reasons.
- Plan to pre-arrange, document and pay for the funeral details.
Making funeral arrangements and choosing the form of interment in advance can avoid conflict and the strong emotions that such decisions often elicit. For example, re-married widows and widowers should determine in advance who is to be buried with whom. Pre-planned and detailed written funeral instructions avoid controversy and more hard feelings
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About the Author~ Francis Burton Doyle, Esq., WealthPLAN
• Member, State Bar of California
• California State Bar Certified Legal Specialist, Taxation Law and Probate, Estate Planning
and Trust Law
• Founder, WealthPLAN, 30 years of experience in Tax, Estate-Planning, Probate, Trust
Administration and Litigation
• Instructor, California Continuing Education of the Bar (CEB) and National Business Institute (NBI)
• Professor; Lincoln Law School of San Jose, Wills & Trusts and Real Property
• Past President, Santa Clara County Estate Planning Council
• Past President, Silicon Valley Planned Giving Committee
• Past Chair, Planning Committee, Annual Jerry A. Kasner Symposium, Santa Clara University,
School of Law
• JD, University of San Francisco Law School, MS, Taxation, Golden Gate University, BA,
Santa Clara University
Exclusive Estate Administration, Inc. Thanks Mr. Burton Doyle and Mary G. Anderson for allowing us to share this helpful information! Here is some additional information, we think you will find helpful.
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