John Bullis: Avoid family conflicts over inheritances
No matter how well you and your family get along, you can help reduce or avoid family conflicts over inheritances by taking action now. “Do it now” concept.
Early and good communication can help avoid misunderstandings, surprises and conflicts over inheritances. It may be best to start talking about your goals and plans with your family members (including in laws in some cases).
If you are planning to leave your assets to your children, it is good for them to have at least a rough idea of what they might inherit. They should be doing their own estate planning and what they might inherit is important to do that planning well.
If you expect there might be a conflict among your children, you should consider not naming one or more of them as Trustee or Executor. Ask another relative, trusted friend or professional advisor to serve instead. A Trust that avoids (public) probate may be better than only a Will.
Even an equal division between children can turn out to not be fair. Maybe you made a loan or a large gift to one of them. If you think that should reduce their share of the inheritance, talk about it and explain what you have provided and why. If you just can’t bring yourself to talk about it now, maybe you could put a separate letter with your Will and/or Trust documents. Or, better yet, ask you attorney to include some explanation and wording in your revised documents and do an explanation letter as well.
If one of the children has been involved in caring for you, maybe their share could be increased. Or you could do a contract for that care and pay them standard care charges. If Mary receives payment for caring for you, it will be taxable income to her and most likely a medical expense income tax deduction for you.
There are more “blended” families now. It is reported about one-third of the people in blended families expect or have experienced conflicts and disagreements about who inherits what. Properly drawn estate planning documents (and open discussions) can avoid those conflicts in many cases. If you have children from a prior marriage, a qualified terminable interest property trust (QTIP) might be a help to provide income and support for your current spouse and also provide for your children at the death of that spouse.
Sometimes the division of personal property causes hard feelings. You can do a list of who gets which (major) item and keep that signed, dated list with your Will or Trust. Or you can provide a procedure they are to use to rotate choices, take turns choosing items. Certain items can have special meaning for various individuals. Maybe talking with them will help discover which items would be treasured by each person.
While you are doing all that, please double check your beneficiary designations to be sure they are what you really want. And be sure to name contingent beneficiaries.
By considering all of this, you can help avoid family conflicts after you are gone.
Did you hear? “You get what you get, and you don’t throw a fit,” Advice from preschool.
John Bullis is a certified public accountant, personal financial specialist and certified senior adviser who has served Carson City for 45 years. He is founder emeritus of Bullis and Company CPAs.