One of the main reasons to create an estate plan is to avoid family fights. Your estate planning attorney has various tools to do so, from creating a revocable living trust to drafting a detailed and legally sound will, as outlined in the article “6 Estate Management Strategies to Avoid Inheritance Disputes and How to Implement Them” from Legal Reader.
Creating a revocable living trust and placing property in the trust allows that property to pass to beneficiaries directly and according to the instructions you provide in the language of the trust. Property not in a trust may need to pass through the probate process, where those involved might need to attend lengthy and stressful court proceedings. In some jurisdictions, the court may require the presence of all heirs and even estranged family members who were not properly disinherited.
By passing property in a trust, you can completely reduce or avoid the need for your family to go to court. In addition to a trust, an experienced estate planning attorney drafts a will as a backup plan. A will is a legally binding document the court uses to determine how the decedent wanted their assets and property distributed upon death and who collects and distributes the property. While the goal of estate planning is not to go to court, if you do end up in court you want to have a will. With a will, the court knows your wishes and the judge doesn’t have to decide who gets what based upon the law or decide who is right in a family fight.
Some assets pass through beneficiary designations, including life insurance policies, retirement, investment, and bank accounts. To avoid problems with these financial assets, regularly review and update beneficiary designations to avoid giving someone no longer in your life a generous gift. These should be reviewed anytime a significant life event occurs, like marriage, divorce, birth or death, changes in financial circumstances, or when you acquire new assets.
A prenuptial agreement can mitigate the risk of disputes in the event of a divorce. They are particularly important in states where the courts can divide property acquired during the marriage regardless of where the assets came from. Prenuptial agreements may scare some people, but they can be helpful in opening discussions between couples about what they own and their expectations for the future. A prenuptial agreement can determine what happens to the couple’s property upon divorce or death.
A well-drafted no-contest clause in a trust and a will can diminish the likelihood of legal battles among heirs. It helps dissuade disgruntled beneficiaries from pursuing costly litigation by putting any inheritance at risk if they should decide to pursue what they feel are unfair distributions.
Communicating your wishes to your family and listening to their input is the best way to avoid a family fight. You can use their input to put directions in your trust that avoids future issues. For instance, there are many options for how to distribute real estate. In some situations, liquidating non-cash assets like real estate makes the most sense. It’s far easier to divide cash than pieces of a house. Another option is a buyout arrangement if one sibling wants the real estate more than the others. Beneficiaries could buy out each other’s shares if there’s more than one heir, eliminating the need to sell the asset. A well written trust can provide for any of these outcomes.
By working with an experienced estate planning attorney, you can ensure your trust is clear about your wishes, prepares for unexpected scenarios, plans for taxes, and minimizes ambiguities. Reach out to us now to get started.
Reference: Legal Reader (Dec. 4, 2023) “6 Estate Management Strategies to Avoid Inheritance Disputes and How to Implement Them”