Avoid Probate Fights – How to Plan for and Settle Unequal Estate Bequests

Leaving unequal distributions of your estate can lead to probate fights, or family feuds of other sorts. If you don’t want to leave equal amounts to your heirs, know that expert sources all agree that you have the right to do whatever they want to do with your estate. If you want to leave unequal distributions, that is your business. However, they also agree that leaving unequal distributions can lead to more legal challenges to your estate’s distribution as well as to more anguish and conflict between your heirs. Why would you ever want to divide your estate unequally and how can you avoid probate squabbles and family fights over your inheritance?

Why leave unequal estate bequests?

Maybe half the assets are tied up in the company business and only one of your children is interested in the business. The business is your baby and you want it to live eyond your life. Should you vest the interested child with the entire business?

Perhaps one of your children had a mis-spent youth – did drugs and ruined their mind. You are pretty sure that the siblings won’t be able to or desire to care for the black sheep. Yet you feel responsible and don’t want to force the government or other charities to care for that ruined child. Should
you provide more for this child – the one who didn’t live up to your expectations? How can you explain that decision to the other three hard working, healthy and productive children?

Perhaps one of your children has lived with you, mooched off you actually, for years. Should that child get an equal amount when you die? After all, s/he did keep you company (sort of).

Maybe you want to reward the heir that worked hard and managed well, instead of the one that can’t seem to keep a job or get two nickels together.

How to plan for unequal estate bequests – what the experts recommend.

If you do want to leave unequal distributions consider these suggestions:

Keep in mind that your heirs may consider how you distribute to be their final report card. Sometimes heirs think that money and assets equal love and admiration. If that is not the case, make it known!

Freely and openly discuss why you are doing so with all involved parties. As a parent, you can address any issues that arise from those discussions. Understanding why you are doing this goes a long way to dispelling made up reasons – such as ‘you always loved Johnny better’.

If you can’t discuss with your family before you die, consider leaving a written document which explains your rationale. Include your intent and your hopes that your heirs accept the situation and don’t hold grudges against one another due to it.

If you think one child needs more support than the others, but are afraid to leave unequal inheritances, consider distributing only 80% of your property and putting the other 20% in a trust to care for any child that ends up needing help.

Remember that leaving equal amounts of assets always really isn’t fair. You may have provided a great deal of support during your life to one of your heirs, and want to even out the finances in your estate.

Consider – if you can – giving at least a portion of your estate away while you live. You might avoid some taxes, get to see it enjoyed by your would be heir and deal with any jealously that surfaces yourself instead of letting your descendents duke it out.

If one of your children is currently more involved in the family business than others, and has put a lot of time in on it, think about trying to involve the other heirs in a part of the business as well. In Preparing Heirs, Williams & Preisser state that this will often force the non-participating heir to realize what sweat equity the involved child has been putting into the business. That way the non-participating heir should realize that what you want to do with the business may not be equal, but is fair.

Another suggestion on passing the family business is to provide shares to all heirs, but provide control and extra income to the heir that is involved in running it.

The experts also indicate that often heirs squabble more over the real assets – such as the antique family furniture or a souvenir from a beloved family vacation than they do over money.

Suggestions for avoiding squabbling heirs include:

• Giving items away while you live.
• Designating that a specific item will go to a specific person in a letter of instruction.
• Setting up a process for heirs to use to decide who gets what. This could be letting the executor decide, forcing the disputed object to be sold and the money distributed, a round robin selection where each heir picks one thing, then the next heir picks one thing until all is gone, putting all the stuff up for auction and letting heirs bid on it first or any of a number of other processes.

How to settle unequal estate bequests – what the experts recommend.

Steven J. Hendlin, Ph. D. in Overcoming the Inheritance Taboo, suggests that there is extreme reluctance to open up the conversation on inheritance while the giver is alive. We all tend to deny our mortality. Discussing what will happen to our worldly goods when we die is akin to dealing with our own deaths, something that is difficult. He calls this the ‘inheritance taboo’. Not only are we reluctant to speak of it, but those we are about to leave behind are reluctant to address the topic as well – lest they be considered gold diggers by remaining family member and friends.

Each sibling goes through the grieving process differently and with different timing. Grieving can exaggerate emotions and cause us to do things we might not otherwise do. Each sibling has had a different relationship with the parent and the type of relationship may impact how the terms of the will or trust are received, or the strength of the reaction to not getting a physical object by which to remember the parent. There are varying degrees of guilt and regret between the siblings, which can color the emotions involved during the inheritance process.

At times, even the fact that a particular person was designated as the executor can cause issues. If this is the case, some experts suggest that the designated executor solicit opinions on certain aspects of the distribution from the rest of the heirs, or in extreme cases, even consider declining to serve thus opening up the spot for others to take over.

Resources:

• Wills: How to Give One Child Less by Rachel Emma Silverman Wall Street Journal Weekend Investor September 10, 2011
• Overcoming the Inheritance Taboo – Steven J. Hendlin
• Estate Planning for the Healthy, Wealthy Family by Stanley D. Neeleman, J.D.; Carla B. Garrity, PH.D. And Mitchell A. Baris, PH.D.
• Preparing Heirs by Roy Williams & Vic preisser