If your kids never got along while you are alive, what makes you think they will get along when your gone? The old maxim “The best predictor of future behavior is past behavior” should be closely considered by parents who want to maximize the likelihood of a conflict-free transfer of family assets to their children. The risk of future legal conflicts between sibling trust beneficiaries can be managed in estate planning.
Every long-term relationship, especially among siblings, will have a certain degree of conflict. Whose children never squabble and have arguments? It is a matter of degree, and for some brothers and sisters, it needs to be considered in estate planning. Between some siblings there is a seemingly incurable friction from an early age. These strained sibling relationships may persist into adulthood. Some brothers and sisters, when growing up, could hardly be left in the same room without a fight erupting. If these are your children, it’s a fair bet that there will be fights when your gone. You may have great kids, but they have been conditioned by the past. Plan your estate for sibling conflict avoidance.
If you are worried about a painful and expensive conflict erupting between your children, you can draft an estate plan, or modify and existing plan, in a way that minimizes the odds of a dispute over the family estate. Here are some tips worth considering:
- Avoid Unequal Distributions – Parents make unequal distributions to their children for a variety of reasons. It’s not uncommon for a parent to give a boot to the child who has not been as successful because of any number of reasons. This can cause a deep resentment in the children who feel they worked harder and achieved more. Also, some parents want to reward the “good” child who came to visit. This can motivate other siblings to challenge the disposition. Remember when the children unwrapped presents at Christmas. There is less to argue about when everyone gets the same value.
- The Risk of Sibling Caregivers – Commonly one child lives at home with the last surviving parent and provides care. Often, they have power of attorney over the parent’s finances. The compensation received by the caregiver must be carefully gauged in light of state law, particularly the law of fiduciaries. Gifts to the son or daughter caring for aged parent are presumed invalid in many states and may spawn a family dispute. Compensation given to caregiver sibling should be carefully gauged, reasonable, meticulously documented, and authorized by the trust agreement. It is also wise to disclose it to other siblings, so it does not come as a surprise and agitate other siblings after the parent’s passing.
- The Co-trustees Mistake – Don’t make the mistake of believing the sharing of power over the administration of the trust will help avoid conflict. The opposite is usually the case. When you choose who will be the successor trustee of the trust choose the person who is most capable of getting the job done according to the terms of the trust agreement. Successor trustees don’t have to be your children. In fact, in families with kids prone to fighting, it may be better to designate a trustee who is not a child if they are willing and able to do the job.
- Consider a Will – Probate court gets a bad rap because it is generally more expensive and time consuming than the administration of a trust. The benefit of probate, however, is a judge oversees the orderly distribution of your estate. You don’t get that kind of oversight with a trust. Siblings who are waiting for the distribution pursuant to a will know the administrator is acting under court order and has taken an oath to properly administer the estate. When a sibling trustee is administering a trust, the other siblings may become anxious and start questioning the trustees conduct, and possibly hire legal counsel to make a challenge.
- Use a Different Transfer Strategy – Maybe neither a will or trust are best for the transfer of your property to your quarrelling kids. Simple estates without real property may be able to pass without a will or trust. If cash is the only assets that would cause a probate, ask your bank if you can arrange for the transfer of your accounts on death. Real property can also be deeded upon death although it cannot be divided in the same manner as a bank account. Also, qualified retirement accounts and life insurance generally pass according to beneficiary designations. These other methods are probably not suitable for estates with real property or other assets that need to be sold before being divided. Talk to an estate planning lawyer about alternative succession methods to avoid an unwanted probate.
Name a Professional Successor Trustee to Administer Your Trust – If it makes sense from an economic perspective, designating a professional is one of the best moves a parent can make for their warring children. The trust agreement can designate a company that will act as trustee and distribute the assets to the children, or hold them in trust for the beneficiaries, as the trust agreement may instruct. Siblings often question or challenge the manner in which a child is administering the trust. A professional trustee is an excellent away to remove the risk of a sibling beneficiary challenges against a sibling trustee.
If your kids fight, you should discuss your estate plan with an attorney. Online trust kits cannot address the risk of beneficiary conflict. With some strategic planning, your children can receive their inheritances timely and peacefully.
Attorney at Law
Estate Planning Lawyer Reno Nevada