6 Steps To Help Avoid Estate Litigation

Estate litigation can be a huge endeavor. It’s no small thing to prepare the necessary documentation, and do the actual planning.

Planning an estate can be a huge and cumbersome endeavor. It’s no small thing to prepare the necessary documentation, get everything notarized, and amend all the necessary ownership papers, not to mention do the actual planning.

No matter whether big or small, deciding who gets what, when they get it, and how it should be managed until they get it, takes both time and a lot of expertise. Each state has its own set of considerations. This can range from taking into account how property is divided in marriage, to understanding the minute differences in the probate codes of each state.

But out of all these preparatory challenges, one of the most debilitating problems an estate can face is familial litigation. When family members begin to claw at each other verbally and legally over the judgment and decision making of a deceased loved one, a strained family dynamic can quickly turn into irreparable damage to the family legacy, and hefty financial blows to the remainder of the estate.

Why Estate Litigation Occurs

There are plenty of factors that go into why an estate might face litigation. These include jealous or confused family members, a trustee with poor judgment or lack of communication skills, an incomplete or contradictory estate plan, sibling rivalries reigniting over old heirlooms and contested properties, and family tensions reaching an all-time high with a controversial decision on behalf of the decedent. 

It’s no wonder that inheritance plays such a big role in both mythical dramas and modern film. For wealthy decedents and their heirs, the stakes are extraordinarily high, making for great theater. But rather than pure fiction, there’s more than a grain of truth to the heartache and vitriol unleashed by a poorly prepared plan and resulting estate litigation.

Step 1: Spell It Out

The first and most important piece of advice is to have a comprehensive estate plan – and not necessarily just one that exists in the form of multiple unrelated, fractured documents.

Lay out the plan itself in a document of its own. Be sure that any family members and representatives tasked with reading and carrying it out in the future have everything they need at their disposal to properly interpret your wishes.

Step 2: Read the Documents (and Correct Them)

It is one thing to have a plan, it is another to put it into action. Having properly authored and thoroughly checked estate planning documents is another important step that some tend to skip.

A first-draft DIY will or trust is rarely the ideal choice for anyone creating their own estate plan, but even if you’ve gone through the trouble of rereading and reworking your plan over multiple years, there is no harm in getting a professional opinion on it as well.

If you update a piece of the plan, then be sure the rest of the plan is still coherent. Much like changing a single ingredient in a recipe, there are times when other alterations need to be made to compensate – putting an asset you have already assigned a beneficiary to into your living trust can send mixed signals, for example. 

Step 3: Understand the Plan

This step is particularly important for trustees and executors. These are certainly different jobs tackling individual portions of an estate. Those in charge of performing them should be equipped with the bigger picture.

It’s much like how performers in an orchestra need to play their part, but also need to understand how it fits into the orchestration as a whole. The decedent plays the role of conductor, but it’s still up to each performer to work together in cohesion – especially trustees, who often have much greater flexibility when managing the assets in a trust over a long period.

Step 4: Take Family Dynamics into Consideration

When planning an estate, you need to account for how each document and tool plays a part in a greater plan – and how these parts come together to translate your wishes into reality.

But before the planning begins, it’s important to consider how those wishes would affect your loved ones. If your family dynamics are frayed and complicated, it’s important to at least consider confronting them before creating the plan. This is typically a better plan than keeping everyone in the dark on how you plan to split the estate.

Step 5: Create a Petition for Contested Actions

Another one of the ways trustees and fiduciaries can protect themselves and the estate against unnecessary litigation is by taking into consideration all the info they have obtained over time to identify contested assets and actions and obtain approval from the estate’s beneficiaries for any selling or managing of said assets and actions.

If, for example, you want to avoid making a mess of things by inadvertently selling a family heirloom or selling stock to diversify an undiversified portfolio and protect (and even grow) the estate in a safe and conservative manner, then you could create a petition to be signed by the involved beneficiaries condoning or disallowing the action, preventing conflict before it even arises.

Remember, your highest duty is to benefit the estate and the beneficiaries.

Step 6: Work with Estate Planning Professionals

This step is undoubtedly the most crucial of all. There are many trust instruments, clauses, and documents that allow trust grantors to avoid unnecessary complications and misunderstandings, competently and wholly inform both their trustees or executors and the beneficiaries and provide insurance to avoid conflicts of interest between different beneficiaries, such as the trust income beneficiaries and remainder/principal beneficiaries of a living trust.

If you are worried about your family’s future miscommunication and wariness for one another, then taking every measure possible to codify your wishes and ensure that your voice on the matters of your estate ring loud and clear is important. Your representatives should be armed with every option available to defend how you plan to distribute your estate, and it should be communicated to your family how you plan to bequeath what you own – and whether you wish your family’s fortune to grow conservatively over the generations or go towards each beneficiary’s pursuit of their individual dreams and fortunes.