Dr. Val Farmer
Rural Mental Health & Family Relationships

Divide Your Estate, Not Your Family (Part Two)

April 14, 2008

It is often the human element that causes otherwise well conceived estate plans to be the flashpoint for family dissension. Conflict and violations of family trust can be caused by family members who position themselves to exploit their parents’ estate financially, a failure to plan for the disposition of tangible and sentimental possessions, and poor communications around estate planning that leads to sibling distrust and conflict.

Those aren’t the only conflicts. Here are some others:

Health and caregiving issues. Parents can quite accurately anticipate and plan on their eventual mortality. What is more difficult to predict is their own susceptibility to aging, dependency, disability and dementia. The expenses surrounding healthcare and caregiving require a draw down on parental assets. Family decisions about appropriate care can be emotional and subject to family dynamics.

Sometimes selfish family caregivers are in a position to exploit their parents financially, exercise undo influence against other siblings, and withhold needed care or services. They can also isolate their parents from siblings in order to shield scrutiny from their activities.

More often though, it is the family caregivers who have a strong emotional relationship with their parents and are committed to their well-being. Parents in their dependent situation may come to resent their caregiver and irrationally turn against him or her. Siblings may insert themselves into this normal conflict to everyone’s detriment.

Siblings sometimes view the caregiver’s activities with suspicion, question the quality of care, and see the mounting health care costs as a loss of potential inheritable assets. Conflict over compensation issues for the family caregiver is common. Siblings may see opportunity in the caregiving role to take control of this situation and initiate guardianship and conservatorship fights.

Parents can help prevent these fights by specifying who and what they might choose for the caregiver role, housing preferences, and deciding adequate compensation so these decisions aren’t left to siblings. Also the best defense against abuse of vulnerable parents is concerned family members visiting, communicating, and paying attention to their elderly parents. It is when family caregivers are left alone with these responsibilities without concern being shown by their siblings that abuses can occur.

Remarriage and biological children. Conflicts arise when the parent dies after remarriage without setting aside premarital assets for inheritance by the biological children. The surviving spouse forgets all the promises he or she made as far as a fair distribution of assets and allows his or her children to legally inherit those assets. Probably more emotionally devastating is the loss of sentimental objects and keepsakes to the second spouse’s children from prior marriages.

Also if the surviving spouse is to be taken care of through a life estate, the biological child, as an trustee, may be in a conflict of interest situation. The more he or she withholds assets from the surviving spouse, the more assets will be retained for inheritance. Having a commercial trustee to decide needs based on a prior lifestyle, review budgets, and to examine tax returns and other documents will minimize potential conflict.

Obvious favoritism and unfairness. Equal is not always fair. Equal can be unfair to the unusually devoted child who has been a great assistance to the parents.

Equal can be unfair to family members in a family enterprise where their contribution helped create part of the value. By taking away needed assets from a family business, it may doom that business to failure. On the other hand, it is unfair to leave the majority of the family business assets to one child and short-change the non-business heirs.

There are many family considerations that make estate planning extremely difficult. They include: sons/daughters, oldest versus younger, deserving versus undeserving, needy versus established, married or single, health issues, children versus no children, ability or disability, adopted or stepchildren or biological children, spendthrift child, troubled marriages, prodigal children, favored children, family caregivers, in-law concerns, etc.

With all of those issues to consider, deciding on what is fair is a tough call. The attorney can push for the best family resolution while at the same time respecting the parents desiers. Sound legal advice would include a willingness to play devil’s advocate and give feedback on parent’s wishes that might be perceived unfavorably by particular family members.

To avoid an obvious injustice that would inflame the family, parents should seek independent legal advice free from the pressures of family members, real estate salesmen, investment advisors, or a longstanding family attorney who may be inclined to rubber stamp parental wishes.

Parents need to select an attorney and estate planner who is willing to play devil’s advocate and give feedback on how the parents’ wishes may be perceived unfavorably by the rest of the family. The attorney can push for the best family resolution while at the same time respecting the parents’ desires.

Parents can have forthright discussions with their children about their perceptions of a fair inheritance as a part of gathering information for their decisions. Disclosure to the family of parental intent as a way of soliciting feedback may be helpful but also has the potential to backfire and create conflict.

If there is an obvious bias that the parents continue to want in their will, they need to show their deliberative thought process on how they arrived at that decision. That way children will be more inclined to accept it, rather than be angry or suspicious of a sibling’s undo influence. Again the attorney can play a key role in describing the process the parents’ went through in arriving at their decisions.