Keeping the Family Together this Holiday Season and Beyond

by Jackie Bedard on December 12, 2011

in Estate Planning,Family Wealth

This article was original featured in our newsletter last year. Don’t receive our newsletter?  If you’re a Triangle area resident, sign up here.

The holidays are finally upon us!  I hope that in the weeks to come you are able to spend time with family and friends that you don’t get to see regularly through the year.  That is, of course, the beauty of the season.

While I don’t want to detract from, or put a negative spin on the festivities, now is a great time to remind you of how vital estate planning is to ensure the happiness of your family for years to come.

Understanding Family Dynamics

This year, as you sit around your holiday table, I want you to imagine those smiling, happy faces engaged in an ugly, destructive battle over your estate when you are gone.   While we all secretly hope this would never happen, sadly I’ve found it to be a natural response when a loved one passes away.

For many families because of a lack of clarity and planning, family cohesion becomes a distant memory upon the parents’ death.

But this can be avoided!  You have quite a bit of power when it comes to keeping peace in the family even years after you’re gone.

Easy Ways to Make a Change

The first step in doing this is to make absolutely sure you address specific issues that could arise during the distribution of your estate.  This is important because boilerplate wills and trusts give only the legal parameters for your successor trustee or executor to follow.  So, for example, your plan might give directions about how the family home is to be distributed.  But, what if two of your heirs want to purchase the home?  What if one of your children wants to keep the home in the family, but can’t afford to purchase it outright?  These are the type of issues that arise every day—and are rarely addressed in a typical estate plan.

Therefore, to avoid such hurt feelings or hostilities between relatives that might require a court’s intervention, you should analyze whether standard provisions in the family’s estate plan address your intentions as to the distribution of your assets.

Here are a few things that I recommend to avoid such problems:

1. Be specific about who will inherit your assets – especially the family home.

Without specific instructions about how assets will be distributed, it will be up to the trustee to decide who gets what.  Not only does this mean that someone else will be making decisions that you should have made, but it is a tremendous responsibility that he or she may not be prepared to properly (and peacefully! ) deal with.

It‘s also a good idea to speak openly to your children or other potential heirs to discuss several scenarios that may arise following your death.  Then once you know what you would like to do and what would bring the most peace to your family, I’d advise you to incorporate those provisions are in your estate plan.

2. Clearly address how the value of your assets will be determined.

Fights and arguments can quickly break out among family members when someone believes that an appraised value of an asset does not reflect the fair market value.  If you don’t adequately address how the trustee should arrive at a selling price, unhappy siblings or relatives may hire their own attorneys and force the trustee to spend your assets unnecessarily to have the court review the process.  Wouldn’t you much rather see your hard-earned assets go to your loved ones instead of to the court and to attorneys?   Resorting to court involvement is likely to be the final straw in already strained family relations.  It will be very difficult, if not impossible, to mend family ties once things escalate beyond this point.

Fortunately, this is easily avoided by specifying whether certain assets are to be sold with the proceeds being split, or kept in the family by giving each heir an option of first right of refusal to purchase the asset.  Again, discuss this openly and honestly with your heirs and don’t leave it to the person you chose as trustee to handle such a hot bed issue.

3. Think through the consequences before naming two siblings as co-trustees or executors.

I’ve found that many parents choose two of their children to act as co-trustees to avoid conflict or hurt feelings.  Yet in most cases, the result is actually the opposite.  This is because if they fail to agree during trust administration and come to an impasse, there will need to be court intervention.  Again, this can result in high lawyer fees and a long-term (and possibly permanent) family feud.

Preserving Family Peace Now and Forever

So, this year as you look around the holiday table, think about these issues and ask yourself honestly if you can see the disastrous scenarios I have described.  If so, lay out a very specific path for your trustee to allow him or her to follow your wishes.  That way, your family will continue to share the holiday season peacefully and lovingly for many years to come.

Leave a Comment

Previous post:

Next post: