When it comes to the administration of an estate, controversy often happens. Often these controversies are the result of family conflicts. Understanding these conflicts BEFORE they happen can help you create the proper estate plan to avoid unnecessary delays, legal battles and of course, bitterness.
The sources of conflict within a family can be many. As in life, those sources usually begin with sibling rivalry. Often some adult children feel that the parent favored another child. Some are jealous of the success of their sibling, especially when that resentful adult child did not take advantage of their own opportunities or resources. In other cases, the siblings may have had an argument at one time and have never gotten over it. The way these play out in estate planning can cause delays and significant unnecessary costs.
The Family Business – Special Treatment
If there is a “Family Business”, there can be conflict. It can be very difficult if you have a Family Business where one of the adult children is working in the business and has been for years and the other adult children are outside the business, causing long standing resentment. The one inside the business may feel that they are not rewarded for their work, and the ones outside the business may be resentful of the one inside the business that has more control of how the money is earned and spent.
If the family business is the main source of inheritance then this issue suddenly rises to the top when it comes to estate planning and administration. Usually, the adult child in the business is perceived to have received more or suddenly, the other family members feel entitled to a portion of the assets or income from the family business although they did not participate in it.
Unequal Distribution – Perceived or not
Conflict can also arise where parents leave unequal distributions between the children. Sometimes an adult child is disinherited because they had a falling out with the parent(s).
Dividing different types of assets, such as land, antiques, cars, or favored stocks, can lead to an uneven division.
Are the assets equally balanced in the distributions?
Life Insurance is often a very effective way to balance inheritances when you have an asset that is hard to divide. You can leave the Family Business to the adult child who is in the business and provide Life Insurance (which becomes cash) to the adult children outside the Family Business.
Shared Property – Fighting over ongoing costs
If a parent leaves a “Legacy Property” such as a house, a beach house, a mountain cabin, a lake house, or farm, without leaving a pool of money to pay for the always ongoing maintenance, taxes, and insurance, this can lead to real conflict.
Your estate plan should be sure to leave plenty of cash that provides for the ongoing needed maintenance, taxes and insurance on the property. Also, the beneficiaries will have to come up with some version of an “Operating Agreement” soon, setting out how they will divide the use of the property, who will be responsible for what duties, and other such issues.
Next blog: Part 2 of Family Conflict – Who is in Control?
At the Law Firm of Steven Andrew Jackson, Attorney and Counsellor at Law, we have helped hundreds of families protect themselves and their loved ones, avoid Estate Taxes and Probate Costs, and keep their Estate Plans current with the law through The Customized Protective Estate Planning Solution™.