Articles

Avoiding Family Conflicts – Discussing Estate Plans with Beneficiaries

May 01, 2006

by James P. Cashman

Individuals rarely contemplate the potential for family conflicts upon their death. They sincerely believe their children will cooperate, and that there will be “no problems when they die.” The reality, however, is that most families will become involved in some type of personal conflict upon the passing of one or both parents. When Mom or Dad dies, the family dynamics often drastically change. Therefore, it is imperative that all clients fully address these issues. Below are just a few common conflicts that can arise in the administration of an estate.

Personal Effects with Emotional Value
Perhaps the most common family conflicts occur over the distribution of personal effects. Typically, conflicts over jewelry, clocks, pianos, china, and other heirlooms have little to do with monetary value, and much to do with sentimental value. Children may become engaged in bitter fighting over an item that reminds them of a parent, or that “Mom said I was going to get.”

Because conflicts over personal effects can spur serious animosity among family members, clients should consider giving instructions to the executor/trustee. These instructions should detail what items will be distributed to whom. While this can be accomplished with estate planning documents, amending with changes of mind can become expensive. An alternative, particularly with items lacking monetary value, is to sign a letter of instruction addressed to the executor/trustee indicating the client’s wishes regarding gifts of tangible personal property. Executors/trustees are compelled to respect these expressions of wishes. With such a letter, clients can control the disposition of personal effects upon their deaths without having to change their estate planning documents.

Successor Trustee Selections
In estate plans involving the creation of a trust, the named successor trustee generally faces an array of extremely difficult tasks. If the named successor trustee is an adult child taking over an illiquid estate (because of estate taxes or other reasons), he or she may have to sell assets that not all of his or her siblings agree should be sold. Sometimes the successor trustee will come to be viewed by the other heirs as having too much control over the assets, or as being too slow or unfair in distributing them. When naming a child as a successor trustee, the testator should consider whether or not that child would be able to withstand the pressure that inevitably comes from his or her siblings. Distrust bred amongst siblings because of trust administration questions can devastate families.

Where a second marriage is involved, making a stepparent the successor trustee may have disastrous consequences, since the issue of prior marriages will likely arise. Such an appointment is fraught with peril. Even in the very best relationships, the stepparent is usually in the position to expect income from such a trust, while the children are interested in growth. Because of this, clients should consider appointing a co-trustee who will act as a neutral party in decisions regarding distribution and investment. An even better option is the appointment of a neutral third party to act as the sole trustee.

Discuss How and Why with Beneficiaries
These are just a few examples of conflicts that can arise in an estate. In every case, clients should consider discussing how the estate plan is set up, and why it was done that way with all beneficiaries. The chance for later conflict is minimized when clients have talked candidly with their beneficiaries about their estate plans.

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James Cashman, Berliner Cohen partner, represents a wide variety of families and individuals in estate planning matters, including wills, living trusts, insurance trusts, complex trusts, educational trusts, charitable trusts, family partnerships, foundations and probate and estate administration matters.  For more information, please contact Mr. Cashman at james.cashman@berliner.com.

©2008 Berliner Cohen.  This article is not intended to and does not constitute legal advice or a solicitation for the formation of an attorney-client relationship and no attorney-client relationship is created through your use of the Berliner Site or your receipt of the materials.  Attorneys in the Berliner Cohen Estate Planning Group will be pleased to provide further information regarding the matters discussed in this article.