Preventing Estate Disputes
By Robert M. Horne, Esq.
Several celebrity estate disputes were featured in the news recently, including Casey Kasem, Mickey Rooney, B.B. King and Robin Williams. However, long-simmering family tensions that lead to lawsuits aren’t relegated to the rich and famous.
I often see family members questioning whether their parents intended to give so much to someone or to exclude someone from an inheritance. They may argue over the actions of a personal representative or trustee during the course of administration, or otherwise find something to fight about within an estate or trust.
The best defense is a good offense…
To stop your own family feud, talk to your loved ones and beneficiaries while you are alive and well. Let them know your intentions and explain your reasons for the structure of your estate plan and the gifts you are (or aren’t) making.
The value of your loved ones hearing your explanations and rationale in your words from your mouth cannot be overstated, nor can it be replicated when the estate planning attorney tries to explain your reasoning to your loved ones after you are dead.
To communicate your reasons underlying your estate planning structure, you must first have an estate plan. A good one will involve a lot of information gathering and communication with your estate planning attorney, family, accountant, financial advisor, charitable beneficiaries (if applicable) and any professional fiduciaries you may involve in your planning.
The implementation of your estate plan will require – at a minimum – a Will, Power of Attorney and an Advanced Health Care Directive, as well as a review of your beneficiary designations on insurance policies, and various qualified plan and brokerage accounts.
However, while offense wins games; defense wins championships.
Even after you have explained your motives and rationale to your loved ones and beneficiaries, you need to ensure your estate plan can withstand whatever attacks may be launched after you're dead.
Identify potential heirs or beneficiaries who may be inclined to challenge your plan. If you have children from a prior marriage and are now re-married, there is a natural conflict that arises all too often between a second spouse and step-children. If you have supported one child more than others during your lifetime, there may be some jealousy or just old fashioned sibling rivalry.
It may behoove you to include In Terrorem provisions, which basically state, “Beneficiary A gets X dollars, but if s/he challenges my Will, then Beneficiary A gets nothing. “
Additionally, it may be appropriate to provide a “war chest” to the beneficiary responsible for defending your estate plan. And, in certain situations, you may want to contractually obligate yourself and your estate to take certain actions/make certain transfers to ensure that specific assets are transferred to a specific beneficiary.
Take the steps necessary to dissuade a beneficiary (or an excluded heir) from disrupting your carefully crafted estate plan. Your ultimate goal is to ensure that your legacy is carried out per your wishes – and that your assets go to the people or charities of your choosing.
Robert M. Horne is an Adelberg Rudow Member, who focuses on estate & trust planning, administration & controversy; tax law, and issues facing small business owners. He can be reached at 410.539.5195 or RHorne@Adelberg.com.