Due to new tax laws and exemptions levels, many Americans believe don't see the value in estate planning. Truthfully, a proper estate plan does so much more than save tax dollars is prevents family conflict. Leaving a legacy of your children fighting inside and outside of court over what your wishes may have been is a parent's nightmare. To prevent this nasty (and common) result, I have compiled a list of 5 ways to avoid family conflict over your estate.
- Think: What is the legacy that you want to leave behind when you’re no longer around? This can be even more complicated than it seems. The first level is determining the basics. Is your goal to leave behind certain personal assets or money? Or Is it making sure that loved ones are provided for? The next level is determining how exactly you want those assets to be used. Lastly, think about what would happen if there were no explicit instructions how those assets would be used.
- Meet as a family: I encourage all my clients to have open dialogues with their children and other family members about what you wish to achieve through your estate plan. Your beneficiaries may not agree; but once they hear it from your, they will understand your intentions. The conversation should include not only what your estate plan says but why you wanted it that way. Knowing what mom and dad wanted not only greatly prevents internal fighting but increases the likelihood that your wishes are respected.
- Update your will/trust and powers of attorney: Assets might no longer be available. Beneficiaries may have died. New beneficiaries may have been born (such as grandchildren) or couples may have divorced. If a power-of-attorney moves away or is no longer available, she may be unusable. The best estate plans are ones where it is viewed as a process that is continually reviewed and best suited to different stages in your life.
- Get insured: Life insurance can be used to replace income, pay off debts or final expenses and taxes. It could help provide liquidity to the estate. For example, there might be a huge tax bill that the estate has to pay. If the intention was to leave the home to a daughter, we don’t want to sell the property, but capital gains taxes will have to be paid on that property. The insurance can cover those estate taxes and probate fees.
- Appoint an executor: You want to leave the right person in charge. The person you appoint should be trustworthy, have good judgment and the financial knowledge to do the paperwork that’s required. An executor should also be able to handle the emotional aspects that come with their duties. When a loved one passes, a lot of raw emotions will surface and an executor needs to be able to handle family members who are going through a very sensitive time.
If you would like to meet with an experienced estate planner to learn more about preventing conflict, turmoil, and fighting in your family, contact us.