Unfortunately, you can’t absolutely prevent fighting over or a lawsuit about your will, the trust you create, or your assets (your estate). It is the nature of our legal system. A lawsuit can be filed by anyone. However, here are 12 tips to reduce the likelihood of litigation over your assets.
- Understand what heirs and beneficiaries typically fight about
- Don’t assume your family won’t fight
- Work with a well-qualified, experienced attorney
- Be clear about how assets are to be divided (especially sentimental items)
- Don’t bring your children or other beneficiaries to meet with your attorney
- Be open about your intentions
- Include a No Contest Clause
- Allow litigation expenses to be charged to the share of the beneficiaries involved
- Don’t add someone to an account unless you intend for that person to be a true owner
- Keep your estate plan (documents) up to date
- Pick the right trustee (trust) or executor (will)
- Make a succession plan for running the family business
Part 1 of this Article discusses Tips 1-6. See Part 2 of this Article for a discussion of Tips 7-12.
Tip 1: What Do Heirs and Beneficiaries Typically Fight About?
Disputes pertaining to a trust or an estate can arise in many different circumstances and can take many different forms. Disputes can be informal or can rise to the level of litigation. Such situations often involve lots of emotions, which can make them difficult to resolve. All too often, family members and friends find themselves fighting against each other while still mourning the loss of a loved one or struggling with emotions that have been brewing under the surface for years.
Lawsuits regarding a trust or estate commonly pertain to:
- challenging the validity of a trust or will, often by focusing on whether the signer was mentally competent and/or “unduly influenced” by someone into signing
- disputing the validity of a revision to a trust or will or the creation of a new trust or will based on lack of mental capacity or undue influence
- challenging an ambiguity in a trust or will, such as where an asset is not specifically described (ie “the vacation home”) or where the trust or will is inconsistent with another document, other actions taken by the deceased, or something said by the deceased
- arguing about who should have control or management of a family business after the death of a key family member
- removing an executor or trustee on the grounds they acted improperly
Tip 2: Don’t Assume Your Family Won’t Fight
Just because your family gets along great now doesn’t mean there won’t be any fighting once you’re gone. You may love your kids and they may all get along fine now, but money can do funny things to people. This is especially true when there are ambiguities in documents, inconsistencies between actions taken and the documents, inconsistencies between conversations had and the documents, and/or disparate financial situations between siblings. Taking steps to avoid these things, where possible, can go a long way towards reducing the likelihood of future fights about your estate.
Tip 3: Work With A Well-Qualified, Experienced Attorney
It is important to have a well-qualified, experienced lawyer prepare your estate documents. Doing so will help to ensure that your estate documents are clear (free of ambiguities), which will in turn help to lessen the chance of litigation about your estate and ensure that your wishes are carried out. When selecting an attorney, it is a good idea to work with someone who hasn’t done any work for anyone you plan to leave money or anything else to. This will help to eliminate any suspicion of bias or undue influence. It is also crucial that you are candid with your attorney, especially about matters that are not known by others in your family.
Tip 4: Be Clear About How Assets are to be Divided (Especially Sentimental Items)
Don’t make your children decide how to divide things up: you decide and be clear. Spell out who is to get items of particular sentimental value and consider letting your loved ones know why. Failing to specifically address these items, can be especially contentious for families. Avoid using ambiguous language in your estate planning documents. An example is a provision regarding “the vacation home”. Does this mean the home at the beach? The home in the mountains? Or even what used to be the primary residence but hasn’t been occupied as a primary residence lately? Avoid leaving personal belongings and household furnishings to several beneficiaries “in equal shares,” but without any instructions on how that’s to be accomplished. Who decides what constitutes “equal” shares? How are items that are impossible to value to be divided up? How are items of high value to be divided equally?
Tip 5: Don’t Bring Children or Other Beneficiaries to Meet With Your Attorney
Make sure you talk to your estate planning attorney alone. Your discussions with your attorney should be private. You need to feel free to express your wishes, whatever they are and whomever they might displease. Your lawyer needs to know that you are expressing your honest wishes, not altering them because someone else is listening. Additionally, meeting alone with your attorney will help to defuse suspicions of bias or undue influence from your loved ones with respect to the person who accompanies you to the meeting.
Tip 6: Be Open About Your Intentions
Thinking about death and talking about finances can be uncomfortable. But, letting your loved ones know exactly what you’ve done with your estate planning and your reasons why can go a long way towards preventing a fight about your estate once you’re gone. Keep in mind that your family members don’t have to agree with you—after all, these are your assets and your decisions to make, and they don’t get to vote. You can, however, avoid your loved ones feeling hurt, confused, and/or frustrated by keeping them informed. Eliminate any big surprises and the suspicion and anger that accompanies those feelings. If everyone knows that you made your decisions thoughtfully, not in anger or by mistake, then many of the typical arguments will probably never get raised.