Dr. Val Farmer
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Divide Your Estate, Not Your Family (Part One)

April 7, 2008

The biggest problem with estate plans isn’t the legal and financial framework chosen to execute parents’ wishes, but family emotional issues that disrupt a rational plan of asset distribution. Parents or their attorneys don’t always anticipate or see the ramifications of future family conflicts or difficulties in administering the estate. Here are some typical patterns:

- No conflict. In about one half of estate plans, there is no family conflict. Family relationships are based on love, good communications, mutual respect and trust. Parents have a good understanding of family dynamics enough to create to an estate plan that is inherently fair and acceptable to all parties concerned.

- Successful struggles. When there is some family conflict, a sizeable proportion of families struggle with one or two tough issues and resolve them satisfactorily through communication and negotiation. The estate plan may not have anticipated these issues but the siblings have enough goodwill and communication skill to work through the difficulty.

- Bruised feelings. In about a fifth of the estate plans, family members are hurt by the conflict surrounding caregiving, housing or inheritance decisions. They are offended by the process in which decisions were made, the influence of siblings, or the inequalities of the asset distribution.

A poorly executed estate plan adds to preexisting sibling rivalries. Although not litigious, the conflict results in further strained relationships, withdrawal or avoidance between families.

- The fight is on. Another subset of family members disturbed either by the estate plan or sibling behavior actively lash out to correct problems as they perceive them. These families are embroiled in litigation or the threat of litigation, guardianship or will contests, and exchange hurtful, vitriolic bitterness and hatred. Permanent family rupture is the result that will reverberate among future generations.

Even the best estate plan and among the best of families, there will be an occasional family member who will fight and react negatively no matter what the parents might decide. Not every situation is preventable and the rest of the family will have to endure it as they have all along.

Big mistakes that create family conflict.

- Trusting the wrong person. A family member is chosen and put into a position of trust with regard to finances. This could be a family caregiver, executor, trustee, guardian or personal representative who has access to the parents assets through joint checking accounts (key to the safe), power of attorney (license to steal), undo influence (psychological pressure), or joint tenancy (becoming co-owners of assets originally intended for the estate).

This family member may be tempted exploit their position of trust by the opportunity for financial gain, lack of financial audits or controls, problems in his or her life, and an ability to rationalize behavior because of "deservingness". This candidate for violating trust may be the trusted son, the Johnny-come-lately caregiver, or the favored daughter.

Motivated by greed, this family member may collude with siblings to exploit the parents’ assets, invest to one’s own benefit or collude with an attorney to maximize their own inheritance through revised wills. The right of survivorship puts the widowed parent in control of the estate. The family dynamics surrounding surviving parent are different and he or she is often the target of this undo influence or control.

Appointing the oldest or most trusted child in the family to execute the estate may appear to be a solution. However this can cause family rifts. This "good child", acting out of fairness and respect for the parents’ wishes, may alienate his or her less impartial siblings and be the recipient of their anger at the parents’ estate plan or out of their past resentments for the "fair haired" child.

Being the executor is a thankless job and deserves compensation, something the siblings may not appreciate or agree on. Putting siblings with a history of unresolved conflict as co-executors is doing neither one of them a favor.

Parents may consider putting a trusted friend or a commercial trustee/executor in charge of managing the estate. Also they may consider a second signature by a non-family member on family accounts and have an annual accounting made for expenditures and investments.

- No disposition of tangible possession. Sentimental keepsakes and valued family possessions such as jewelry, heirlooms, furniture, dishes, guns, hobby equipment, and collections can be a source of family conflict. If parents’ haven’t designated ownership or given these things away prior to their deaths, this can result in huge conflicts.

Don’t put competing parties coveting the same item in charge of dividing up possessions. Some things cannot be divided and retain their value. Give it away or sell it and divide the cash. Possession is 9/10ths of the law and the "early bird" appropriators will be resented.

- Revealing too much or not enough. Telling your children about the details of the estate plan may cause anger and resentment toward the parents and subject them to undo pressure or emotional blackmail to change their wishes. By not sharing enough, either prior to death or in the will itself, basic unfairness may go forward uncorrected and/or siblings will imagine that the parents were subject to undo influence and take their anger out on their siblings.

Most children will accept their parents’ wishes if they know the process by which they came to their decisions was fair and that their situation and feelings were considered. If the process is unclear or subject to suspicion, then hard feelings are more likely.