Estate planning exists to prevent estates from going up in smoke throughout the process of transferring wealth after death. What is meant to be a time of grief and peace can turn into legal turmoil, familial subterfuge, and substantial amounts of time and money wasted. Estate disputes can fuel these spectacular losses, turning a routine inheritance process into a smoldering pile of regret, years of litigation, constant hostility, and despicable behavior.
Money can make a family bitter, if one plans ahead poorly. But with the right type of estate planning, you can avoid these potential estate disputes and make the inheritance process a much more peaceful one. All it takes is proper communication, clear paperwork, and the willpower to put it all into place.
Talk to Your Family About Estate Planning
Perhaps the most straightforward way to avoid estate disputes is to speak to your family directly. It’s important to consider beforehand what you’re comfortable discussing, and how much you want your children and beneficiaries to know. If you’re married, it’s recommended that you and your spouse have a very clear understanding of what your estate planning goals are.
Research shows that most families are not comfortable talking about money – and many parents feel especially uncomfortable discussing inheritance with their children. Some believe that speaking to them about an inheritance will only encourage them to be lazy and work less. Others believe it may breed jealousy or misunderstandings between siblings, especially if there is an unequal amount of money being distributed through the estate.
Rather than putting these topics off, it’s important to tackle the head-on – but with a plan. Leaving your family in the dark about your estate plan and other important information – such as who will be handling the estate, who is given power of attorney, where certain assets and documents are located, etc. – can spell disaster in the future.
Instead of putting these talks off, bring your children into the picture. If your children are too young to understand estate planning, then consider simply making them aware of the importance of managing finances, from saving for a toy or a date to making a weekly or monthly budget for personal expenses and keeping tabs on money saved and earned through allowances.
Once your children reach college age, incorporate them into your financial planning, and eventually speak to them about setting up a power of attorney, choosing an estate representative, investment and property details, and how the estate will be divided. Don’t spring it all on them at once but do it step-by-step.
Where jealousy might be an issue, calmly discussing your choices and reasons can expel any serious anger or misunderstanding. If you and your children approach the topic as adults, it’s better to come to a conclusive understanding on the matter of the estate rather than leaving your family to fight in perpetuity after your passing. As a parent and as a mediator, you can quickly diminish the damage and fallout of a potential fight by being calm, understanding, and resolute.
Select the Right Representative
If you’re setting up a will, you will need to choose an executor for said will. If you’re setting up a trust (or several trusts), you will need a trustee to manage said trust after your passing. All these choices require the right people – and it can be difficult to choose, especially when you feel your children are not ready. While it not usually recommended, you can choose a non-family individual to manage your will or trust, so long as the relationship between you is more than monetary. A strong bond of trust is recommended in these matters.
It is wise to assign a durable power of attorney for your finances and assign a health care proxy should you be incapacitated, to ensure that, should you land in a coma or otherwise be alive yet unable to make decisions, your family can continue to take care of your assets and responsibilities, as well as follow your will in health care matters.
Get Legal Documents/Paperwork Reviewed
No estate plan is finalized without a thorough read-through. To ensure your estate plan is cohesive, efficient, and effective, it’s best to go over it all again with a local estate planning expert, so you can lay your worries to rest. Even minor mistakes and tiny clerical errors can be blown out of proportion when the time comes, costing your estate and your family large amounts of money in legal fees to get things sorted out.
Yes, going to a professional can cost you. But especially when it comes to estate planning, thinking in the long term is necessary. Most people with erroneous estate plans tend to pay out more to fix their mistakes than preemptively pay for a professional plan to begin with.
While it is never recommended, it is possible to build an estate plan on your own. Many people with modest and simple estates can find the information they need to set up an estate plan online, and in books. However, it does not hurt to confirm your paperwork anyway – estate laws and tax laws update every few years, and every state has its own probate code and specific estate laws. Therefore, it’s important to seek out local experts in person, rather than asking a lawyer from a different state or through an online resource – the nuances in estate laws between states can make or break your plan.
If your estate is much more complicated, with multiple beneficiaries across state lines and assets all over the country, with various ownership statuses, then getting a professional estate plan is a necessity.
Once everything is said and done, remember that estate planning is not the sort of thing you do once in a lifetime. Ideally, consider updating your estate plan once a year, and once more for any important updates (deaths, births, marriage/divorce, familial fallout, etc.). Keeping an up-to-date estate plan and a security measure like a pour-over will is important, to avoid probate and maintain a harmonious inheritance process.