The Reading of the Will.
It’s a classic scene played for high comedy or drama throughout the world of entertainment.
Somebody—the much younger wife, loyal employee, prodigal child, favorite charity-receives the bulk of a substantial estate. Outrage, crying, and other mayhem ensues.
Whether it’s comfortable to acknowledge it or not, your will is likely to be interpreted as more than a transmission of wealth. The way you disperse your assets is often read by heirs as the last statement about who is important, loved, and trusted.
Of course, it’s your prerogative to leave whatever you want to whomever you please. A thoughtful approach, however, can help avoid a legacy of misunderstandings that you won’t be there to resolve.
Estate planning and inheritance rights vary widely by jurisdiction and can get complicated fast. The better you plan, the greater the possibility that your estate is dispersed the way you wish. We at FJY Financial recommend consulting an estate attorney to help smooth the process. Feel free to contact us for a recommendation.
Meanwhile, here are some common issues that ignite inheritance drama and general guidelines for minimizing misunderstandings.
Heading Off Trouble While You’re Alive and Kicking
Tackle estate planning now to avoid pain and conflict later. If you die without a will, the estate must go through the full probate process—the legal proceedings for settling an estate. A probate court administers (based on state law) who gets what, generally naming spouse and children first. This can be expensive and time-consuming. Even with a will, your estate will settle through probate, but a document significantly reduces the time and expense involved.
You can avoid probate by disbursing your estate through the following vehicles:
- Investment, retirement, or other assets with named beneficiaries
- Assets with joint ownership with right of survivorship
- Lifetime gifts made while you’re still alive
View estate planning as an ongoing process. While your documents should be written with the flexibility to adjust for certain life changes, they are not set in stone. Consider changes when life events dictate—divorce, the birth or death of a child or grandchild, the addiction, or incapacitation of any beneficiary.
Avoid one of the most common sources of inheritance conflicts: subsequent marriage(s). A pre- or post-nuptial agreement that spells out entitlements of spouses and stepchildren can minimize conflict.
Plan your own funeral and burial arrangements. Heirs can hold strong and conflicting views on topics such as religious traditions, cremation, or where you should be buried.
With the exception of healthcare documents, there is usually no need to distribute copies of your estate plan to your children. It may create false expectations or kindle resentment if you decide to make changes. That said, we do recommend sharing copies with your executor or other financial agents.
That said, some issues merit discussion to get all family members on the same page. These include care of a special needs child, family vacation home logistics, or what happens to a family business when you pass.
If you help one of your children financially, be clear in your own mind, and convey to him or her whether the money is a gift or a loan. If it’s a loan, you may want to address the issue in your estate planning to minimize sibling resentment.
Leaving a Peaceful Legacy
Many financial planners and estate attorneys recommend that you treat your children equally in your will. Estate law guru Mark Accettura warns that any favoritism—such as leaving more to the neediest or rewarding the most successful with a larger inheritance—is likely to leave behind a legacy of hurt feelings. Exceptions include children with special needs or those who would use their inheritance to support an addiction or other unhealthy lifestyle. In this case, have a transparent conversation with the heirs when a non-traditional distribution is chosen.
If you want to designate certain items for specific heirs, create a Personal Property Memorandum—a separate list of cherished personal property. Most states will admit this list as part of the will. Describe each item in detail, and sign and date the document.
Think through whom you will name as executor of your estate. In a first marriage, the surviving spouse is a traditional choice. If that is not possible, naming children as co-fiduciaries or creating a fiduciary committee is an alternative.
FJY advisors have decades of experience working through estate planning issues to benefit the emotional and financial well-being of both you and your heirs. We can also recommend other estate specialists with the same objective as ours—ensuring that your estate plan is an extension of a holistic life plan customized for your needs.