Those attuned to popular early rap may remember the notorious B.I.G. song, “Mo Money, Mo Problems.” In a similar sense, even conventional estate planning may lead to major family rivalries and contention, especially following the death of the parent who controlled the family wealth. Sibling disputes can lead to expensive and time consuming legal battles.
Fortunately many of these disputes can be avoided and resolved with proper estate planning before the death of senior family members who created and control the wealth. For example:
- Establishing trusts and wills
- Designating a third-party executor
- Self-directing and intentional gift giving during the lifetime of the wealth creator
- Family members’ education and participation in the estate planning process
These are a few strategies that families can implement in order to avoid future controversies. An especially important consideration is retaining an independent, certified fiduciary who can manage your financial affairs in your best interests.
Initial Steps for Senior Family Members
Pre-death planning is one of the most effective ways to prevent family issues from occurring with current and future generations. More specifically, a comprehensive will that is both specific and measureable with time-lines for implementation is critical. Consider some of the following issues:
*Who inherits what property and assets and under what conditions?
*Who inherits a family business and under what conditions (succession plan)?
*Who receives the genuine da Vinci painting?
*What allocations are designated for education of family members, philanthropies and self-directed charity giving?
Everything that could be disputed should be addressed in a comprehensive estate plan and perhaps a Family Legacy Plan.
Other options include instructions for selling property and equitable distribution of proceeds. In some cases, a parent may wish to exclude from the will a particular offspring. Appropriate rationales for such decisions should be stated clearly.
An impartial executor may be necessary for ensuring peace within the family. You need to ensure that the individual chosen has no financial biases that affect these decisions.
When It Is Too Late for Planning
Unfortunately many families realize the consequences of not having conducted an estate planning process after the passing of the senior family members controlling the wealth. Preservation of both peace and assets and the amelioration of negative sentiments within the family can be maintained with timely action.
We recommend selection of a mediator prior to initiating any negotiations. An independent and certified Fiduciary can assess the situation and schedule family conferences. A certified Fiduciary, as a mediator, would meet the requirement having no personal ties to financial gains and would assist with the following tasks:
*Making fair decisions for asset distribution
*Determining which contested items might be sold for equitable profit sharing
*Choosing appropriate licensed agents to divest fixed assets and investments
Certain items may hold special sentimental value for some family members and cannot simply be sold for profit distribution. In such instances, consider the following options:
- Alternating possession of the desired item among designated family members for specific length of time
- Utilizing a lottery system to randomly assign ownership
- “Quid pro quo” distribution
Estate Planning can be a complex and delicate process requiring professional guidance. This article represents a general overview. You may wish to consider Family Legacy Planning as an expansion of Estate Planning. Castle Financial proudly offers Certified Financial Fiduciaries along with other experts in Estate Planning and Family Legacy Planning. Please call us at 732-888-4994 with your questions and visit our website at www.castlefinancial.com.
We at Castle Financial understand that ultimately you decide what gives you happiness, joy and peace of mind. Our commitment is working with you to achieve both your personal and family goals.