Careful estate planning may help avoid later conflicts and challenges among the beneficiaries and heirs of a person after their death. It is not always easy for a person to discuss these matters with adult children. While communicating with one’s children ahead of time and expressing wishes about distribution of assets may be the ideal way for an individual to handle the situation, realistically families don’t always follow this practice. Far too often after a parent passes away, the children end up challenging the parent’s decisions.
An experienced and knowledgeable estate planning and trust attorney can help an individual prepare for a discussion of their intentions with their children first before the trust agreement is drafted. A trust challenge can be a long and costly process delaying the distribution of assets to the beneficiaries and legal costs can ultimately reduce the value of the estate. Thus, it is a smart planning strategy for the individual to try and resolve any anticipated disputes prior to the creation of the trust. The chances of a beneficiary or heir challenging the trust after the decedent’s death can be reduced when all parties to the trust are aware of the parent’s intentions.
Of course, there may still be situations that arise after a parent’s death where family members may not agree on all financial decisions made by the trustee. A typical example of this is when the deceased parent’s house is the major asset of the estate, and it needs to be sold in order to distribute the sale proceeds to the children. Typically, the house is appraised and sold at market value depending on real estate market conditions. One or more beneficiaries may be unsatisfied with the proposed sales price or terms. However, choosing a trustee that has the beneficiary’s best interests at heart and has the mutual respect and trust of the beneficiaries will make a big difference in how the conflict gets resolved.
While many people prefer to appoint a surviving spouse or child as the trustee to administer the trust, the size of the estate and type of assets may require the selection of co-trustees, a neutral third party or a professional financial planner or trust manager to act as the trustee. Since every person’s financial situation is unique, the attorney will be able to guide the individual in choosing the best suited person or entity to act as trustee.
From a financial and practical sense, the best way for a parent to avoid major conflicts between their beneficiaries after their death is for the elderly parent to consult with an experienced estate and trust attorney who can help them sit down with their children and discuss their estate planning choices. This way everyone is aware of what to expect later and any concerns or disagreements can be addressed upfront. Even though it may be difficult or unpleasant for both parent and children to have such a conversation, everyone benefits in the end by avoiding conflicts, challenges and delays later when it comes time for the trustee to administer the trust and distribute the assets.
Sanford M. Fisch
CEO & Co-Founder
American Academy of Estate Planning Attorneys, Inc.
9444 Balboa Avenue, Suite 300
San Diego, California 92123
Phone: (800) 846-1555