How to plan your estate and keep the family peace
Family inheritance disputes can be a sad reality, and something many people hope to prevent with a well-thought-out estate plan. Some factors, like changes in family dynamics, are unpredictable. Others, like the financial burdens one child might take on when caring for an aging parent, can be addressed ahead of time. Plan ahead, consider the benefits and drawbacks of a will and a trust, and talk with your children to make your inheritance as clear as possible and eliminate disputes.
The easiest way to avoid disputes is to think ahead—and communicate with your loved ones. Make sure your children and loved ones understand why you’re leaving certain assets to certain people, and answer any questions they have if you can.
If you’re giving money to your children before your death, try to make sure it’s equal. Maybe one child really needs your help making a down payment on a new home. Make a note of that, and include the difference for your other children in their inheritance. If you’ve given your children loans, specify the amount they owe in your will. If you’re leaving a large amount to a charity, make sure your children understand why the cause is important to you. Making things clear when you give out money, whether it’s a gift or a loan, goes a long way in preventing hurt feelings later on.
Often, aging parents need assistance, which requires children to make time and sacrifices to help care for them. If one child lives nearby while another lives far away, this task usually falls to the closer child. In some cases, the parent will move into the child’s home, while in others the child will take time to come cook and care for the parent each day. If you’re in one of these situations, the child caring for you probably deserves more inheritance. Maybe they’ve cut down their hours at work to care for you, or spent much of their own money on transportation, food, and other necessities. If you’re living with your child, consider paying rent. If they’re caring for you in your home, pay them a monthly fee, just as you would a non-related caretaker. Or, leave them a larger inheritance, but specify why in your will.
Communicate Your Wishes
Your estate plan should be set up in a way that will distribute your assets the way you desire, while also keeping the family peace. After creating your estate plan, call your children together to discuss any elements you feel need explaining. If assets are not distributed equally, you might want to explain why. If you’re setting money aside for a specific reason, like for education, make that clear. That said, while it’s a good idea to explain why you’re making certain decisions, in the end it is your money, and you don’t need approval from your family to divide it as you see fit.
Be Thoughtful in Decision-Making
When making an estate plan, unless you have a very strong reason, it’s best to divide assets equally among children. Maybe you have a child who is wildly successful and doesn’t need your money, while another is struggling, but giving less to the successful child will likely breed feelings of resentment between your children or hurt feelings. If you’re naming one of your children as executor for your will, explain why, whether it’s because they work in finance, live nearby, or another reason.
While its harder to divide things easily when it comes to physical objects, do your best. Jewelry, for example, can be both expensive and hold sentimental value. Try to talk with your children ahead of time about which objects are meaningful to them, and why. Ideally, they will also talk with each other and understand why one daughter would want grandma’s engagement ring, while the other would be appreciative of a nice painting, for example.
Consider a Trust
A trust is less complicated to set up than a will, but can cause problems if not set up correctly. In a revocable trust, you create an entity in which you transfer the title of your assets in your name, then, you appoint someone to oversee the trust when you die. That trustee is in charge of dividing assets based on your wishes. If you go this route, make sure your wishes are explicitly spelled out, so your trustee doesn’t use his own biases when dividing assets. If things aren’t clear, there’s a higher chance for conflict.
Whether you decide to create a will or a trust, the most important thing is to plan ahead, make your decisions clear, and talk about them with your children ahead of time. You don’t want to leave confusion after you’re gone, especially not if it could ruin the relationship between the people you’re leaving behind. Strive for equality as much as possible, explain your decisions and desires for the inheritance, and ensure your children that any inequalities are a matter of finances, not love.