Family disputes over an estate are one of the big pitfalls attorneys and their clients try to avoid in the estate planning process. Planning is very important in managing the occurrence of these disputes, even where family is willing to work out the issue with one another.
One thing families must do in the planning process is reevaluate what they consider “fair.” When parents try to be fair to their children in order to avoid a dispute, they can end up putting important assets like a business or a home at risk because of children who may not have the same goal as other siblings in managing the asset. Knowing who to entrust assets to is important in estate planning, and fairness takes on a new quality in light of this concern.
Knowing the best way to transfer assets is also important in estate planning. The key is to focus on what makes sense for the person the assets are being transferred to. Each child’s desires and needs are different. Some children, for instance, have special needs that require the use of a trust to protect both them and the family assets.
Major decisions about family wealth should not be made alone, but with the family present. The family should, as much as possible, be in agreement about decisions pertaining to family wealth. Doing so will help avoid future conflicts. These decisions should be made while the founder of the family business is alive.
It is important to know what assets are best to transfer with respect to maintaining sufficient liquidity. By keeping liquid assets around, parents don’t have to compromise their own standard of living, but they can still transfer other assets to children which may not have a good income stream.
A final tip is to consider estate planning as a process rather than a task. Because circumstances in the economy and in families change, it is important to revisit one’s plan from time to time to ensure it is achieving its purposes as efficiently as possible.
Source: Wealth Management.com, “Avoiding Family Conflicts During Estate Planning,” E. Patricia Chantler & Wonsun Willey, May 15, 2013.