How to Handle Issues of Inheritance and Estate Planning

 

Family disputes over inheritance are not a new thing. They have long been the subject of fiction and the source of some very real family feuds. And, research suggests that it is becoming even more common. Since 1985, there has been a steady annual increase in these types of reported disputes. However, when your family is already mourning the loss of a loved one and dealing with the stresses of settling the deceased’s affairs, the last thing you want is conflict. After the loss of my father, this is exactly what my brothers and I hoped to avoid. As we look for ways to prevent conflict, here is how my family has decided to handle issues of inheritance and estate planning.

Finding Ways to Work Together

I’ve lost many loved ones in my lifetime. And death doesn’t always reveal the best sides of people. My personal experiences have also shown me how arguments over inheritance can divide families. When emotions are already running high, people are much less capable of controlling their impulses and regulating their feelings. These circumstances can create the perfect storm that brings old hostilities and new resentments into the light. Therefore, we are doing our best to find ways to work together.

Communicating with Transparency

Having been through it before, I wanted to take every precaution to prevent any fallout after my father’s death. Although we all loved my dad, my siblings and I had a complicated relationship with him, especially as he got sicker. The last thing he’d want though would be for anything to drive a wedge between us. So, the only way I saw to achieve this was through complete transparency.

As we work with my mom to settle his affairs, we’ve decided that there won’t be any secrets. Therefore, everyone has a chance to voice their opinions and have input on major decisions. And, we try to discuss things in a group so that everyone receives the same information.

A Step-by-Step Process

So far, this plan seems to be working well. The most challenging thing has been figuring out what to do with valuable assets. We’ve had many discussions about what my mom wants, who has an interest, and how the rest should be allocated.

To make things simpler, we’ve tried to streamline the process. Once my mom decides what she wants to sell or get rid of, she first notifies her kids to see if we have any objections or interest in it. If we have no need or desire to keep them for ourselves, then she reaches out to my dad’s siblings, extended family, and close friends. After they have a chance to take or purchase them, she will post things for sale publically. That way, everyone has a chance to take something to remember him by. And, no one can claim they were forgotten or overlooked.

Additionally, all transactions are handled through a designated account for the estate. Nothing is sold under the table or exchanged for other items and services. Everything is paid for with cash that goes directly into the account. Not only does this keep things transparent, but it also establishes a history of transactions handled through the estate. So, if anyone has questions in the future, they can easily verify the information for themselves.

Preventing Future Issues of Inheritance

Now that we have nearly settled all his affairs, there are a few key takeaways I have from this whole experience. First and foremost is that there are steps I can take now to prevent future issues of inheritance by doing my estate planning now.

1. Create a legal will that clearly lays out all your final wishes.

The best way to ensure your plans after death is to create a legal will. A legal will is the easiest way to communicate your final wishes. In addition to being hard to dispute, it is also less expensive than setting up a trust.

If you have specific directions, it’s best to include a letter of instruction as well. This will avoid all uncertainty and help guide the person who is responsible for settling your affairs.

2. Decide who will handle your affairs.

Another way to avoid conflict is by choosing someone to handle your affairs. You’ll want to choose someone you trust and notify them of your wishes. If there is tension between family members, it’s wise to choose an impartial person or mediator to get everyone to the table. D

3. Divide your assets fairly.

Although they make for interesting plot twists, it’s rarely a good idea to leave shocking reveals in your will. It often leads to quarrels and hard feelings. I don’t want my loved ones to remember me that way, and I know my dad wouldn’t either. So, we are adopting an attitude of fairness. Talking to your loved ones and making your intentions known will also clear up confusion.

4. Organize your important documents.

Sorting through my dad’s paperwork has been a nightmare. However, it has shown me the importance of maintaining my own records. As I organize his estate and ours, we now keep all our important documents in an easily accessible place. In addition to the documents, we also have included account numbers, passwords, and contact information for our financial advisors and attorneys. Hopefully, this will save an immense amount of time and work when the time comes.

5. Take action while you are still here.

In addition to the final gift of making all your own arrangements, you can also make gifts during your lifetime. You are allowed to make large gifts to let your loved ones enjoy them sooner. In 2021, the limit for the annual gift tax exclusion was $15k per person. However, this limit increases to $16k for 2022. While this makes estate planning simpler, it also allows you to see how it benefits those you love.

Communication Is Key in Issues of Inheritance

Having these discussions is hard. But the only thing worse is not having them at all. If you avoid it altogether, you will leave your loved ones to deal with the issues of inheritance and clean up the mess.

Whether you are making your own plans or working with others to settle an estate, clearly communicate your feelings and intentions.  Be frank and open with one another, especially if there is a particular heirloom or item that will be contested or fought over. If you are settling an estate, be willing to compromise and find common ground.

However, you don’t have to solve every problem in a single conversation. But, talking about it now makes things clear and gives your loved ones the best chance to

Read More

• Preparing for Future Funeral Expenses
• The Problems of Probate
• Estate and Future Planning: Importance of Drafting and Maintaining a Will
• How To Prepare to be an Executor of an Estate (before they die)

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