One of the primary goals when creating an estate plan is to be a blessing to the people you care about most. Whether the documents are complex or simple, they should seek to bring clarity and peace to difficult times.
The incapacity and death of a close loved one can be an extremely trying time. Oftentimes, it can bring out either the best or the worst in people. While many hope that the passing of a loved one brings people together to celebrate their life and legacy, far too often, small, seemingly insignificant details can become a problem that quickly compounds. Not every wound can be avoided, but there are three things that commonly cause issues.
Surprises in Estate Planning Documents
After creating an estate plan that is tailored to your specific needs and desires, you have no legal obligation to share the details of your estate plan with your loved ones. At the same time, if the people closest to you are unhappily surprised by the details in your estate planning documents after your death, this can create an environment ripe for conflict, and hider the fulfillment of your wishes. While it is sometimes not possible to avoid all unhappy surprises, a simple conversation now can often help prevent future difficulty.
It can be uncomfortable to talk about what will happen when you or a loved one passes away. Yet, in many cases it can be beneficial to talk about the basic outline of your estate with your loved ones, especially with the people you intend to serve as your executor, successor trustee, or agent under a power of attorney or advance medical directive. No one is legally obligated to serve in these fiduciarily roles just because you name them to the roles; they can decline to serve if they wish. People are more likely to serve in these fiduciary roles for you if they know you intend to name them to these roles.
If you feel you can trust your beneficiaries with such information, it can also be helpful to speak with them about the basic outline of where your wealth is going, so that they are not greatly surprised at your death.
If you feel uncomfortable or believe it is unwise in your situation to share these decisions directly, consider including letters to your loved ones along with your estate plan. In these letters you can explain your decisions and express to your loved ones how much you care about them.
Unclear Language in Estate Planning Documents
When you are creating or revising your estate planning documents, work with an experienced estate planning attorney. Even if a change you desire seems simple or straightforward, obtain professional legal counsel and do not take it into your own hands.
One ambiguous phrase, missing clause, or imprecise sentence can cause a world of hurt down the road.
An experienced estate planning attorney will be able to guide you and ensure that any amendments to your documents accomplish your wishes and withstand scrutiny. Our attorneys are experienced in writing precise legal language that accomplishes your wishes accurately.
Unequal Transfers of Wealth (especially if it is unintentional)
Imagine that you have an estate plan which gives equal shares of your wealth to your three children. Imagine also that you own an investment account in your name with a pay-on-death beneficiary (POD) endorsement to only one of your children. At your death, that one child will become the owner of that account and will have no legal requirement to share that wealth with your other children, regardless of what is written in your estate planning documents. Furthermore, that one child will still be entitled to an additional one-third share of the rest of your estate, resulting in a very uneven division of your wealth. It is not hard to see how such an outcome could result in disappointment, anger, and even litigation between siblings, all because of a mistaken beneficiary endorsement that conflicted with your estate plan.
It is vital to understand that your will and/or trust does not automatically control every asset in which you have an ownership interest. A will can only control assets that are in your name and have no POD/transfer-on-death (TOD) or co-owner associated with them. A trust can only control assets that are owned by the trust, or that list the trust as the POD/TOD beneficiary. If you have POD, TOD, or any other death beneficiary endorsements that differ from your estate planning documents, then the beneficiary endorsements will control what happens to that asset, not your estate plan.
Therefore, whether you have a will or a trust, you should regularly review all of your accounts and create an asset list that notes the owner of the account, as well as who is listed as a beneficiary to the account. Speak with your estate planner and financial advisor to ensure that the beneficiaries listed on your account work with your estate plan, and not against it.
Disagreements over Untitled Tangible Personal Property (UTPP)
Sometimes, what causes the deepest divisions are items that have little monetary value but great sentimental value. If you own a significant amount of collectible items, or items that you know have great sentimental value for multiple members of your family, consider keeping a Memorandum of Gift (MOG) where you can note which of your physical items you
would like to go to which of your family and friends at your death. By using an MOG, you can help settle ownership disputes over sentimental items before they start.
The Cost of Family Feuds
Conflict among your beneficiaries can result in litigation—a large expense that, at least in part, will likely come from your estate. Having a solid estate plan that is clear, thoughtful, and anticipates tension points can help to lessen interpersonal conflict, help preserve relationships, and can help avoid litigation among your beneficiaries.
If you need an estate plan, updates to your current plan, or just have questions, reach out to our office to see which estate planning strategies would be most beneficial for your unique situation.