8 Tips to Avoid Nasty Estate Surprises

The amount of wealth to be transferred the the baby boom generation to their heirs is expected to be as high as $59 trillion over the next several decades. That’s a lot of money. To make matters worse, our modern society has become more fragmented than ever before. These two facts together will lead to more than a few family disputes.

Here’s 8 tips on how to minimize the chance of a legal dispute over your estate:

  1. Get a good lawyer. Estate planning can be deceptive. Many mistakenly believe a “simple” will is all that is needed. A good lawyer can provide a custom-made estate plan that takes into account your family’s dynamics. This plan can take into account the possibility of a future dispute and provide mechanisms to resolve conflicts earlier rather than later.
  2. Pick the right executor and trustees. Make sure you don’t appoint people to key positions who can’t get along. You will need to make sure your appointed agents are able to work out problems, listen to one another, and work out solutions to disagreements. If that is not possible, it might be best to appoint a professional fiduciary, such as a bank or accountant, to manage your affairs.
  3. Talk about it now. It may be a difficult conversation to have, but sitting down with family members beforehand may go a long way to avoiding conflicts before they start. Inform them of your goals, intentions, and fears. Let them know that you are only doing what you believe to be best for each of them. Make sure they understand your estate plan and the designated roles you’ve assigned.
  4. Know your state’s laws. Estate laws can differ significantly from state to state. The probate process will vary as well. This becomes a compelling reason to hire a strong legal adviser who can inform you about what state laws will apply to your estate and how you can avoid the most onerous ones.
  5. Make your intentions known early and often. Confirm your estate plan repeatedly. It is much more difficult to invalidate multiple wills than to invalidate a single will or trust. Consistent statements of intentions over several years and multiple documents will make it more difficult for a challenge to be made that is inconsistent with your desires.
  6. Make sure your assets are properly titled. Often, aging parents may seek help from a child by providing them access to bank and financial accounts. Setting up joint accounts may also create conflict as other children may believe the supporting child has already received their inheritance early. While the supporting child may believe they were only being reimbursed for their time and efforts. Keeping an assets properly titled and properly labeling any payments to children before death will minimize disputes.
  7. Consider including a “no contest” clause in documents. A “no contest” clause says that if someone contests an estate and loses the claim, then they are automatically disinherited. The intent is to act as a deterrent to meritless claims that would drain the assets. By providing the threat of an economic loss, the challenger would be reluctant to bring a claim they were likely to lose, but would nonetheless reduce the estate’s assets. A recent trend is to require challenges to be submitted to a third-party mediator or arbitrator for a quick and cost-effective resolution.
  8. Don’t try to excessively manage the estate from the grave. Allow heirs some room to make their own determinations among themselves. Rather than trying to dispose of every single asset to named beneficiaries, allow the beneficiaries to exercise some ability to divide the estate up how they agree. Save the specific gifts for those special items where there would not be an agreement.

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