Plan Now to Avoid an Inheritance Feud Later

How to Avoid an Inheritance FeudFor 15 years, Michael Smith's youngest brother didn't speak to their mother, nor did he utter a word to their father for the three years prior to his death from colon cancer this past summer. But he's got plenty to say now -- mostly, "Where's the money?"

Their dad cut him out of the will in 2008, and now he's fighting his two brothers over the $7 million estate, claiming that their father was mentally unable to make decisions back then and that he was unduly influenced by his older sons.

"This is family against family. It's sad," says Smith (not his real name). For him, it's not really about the money, but the fact that as executors of the estate, he and his older brother want to honor their father's clear wishes. "I had asked dad if he wanted to keep my brother out of the will, and he said it like three times: 'f--- him.'"

Smith has hired an attorney to handle the dispute. He adds, "My dad had to be hurt to remove him from the will, and it probably took him a long time to decide to do so. My brother and I can't disrespect his memory."

Fighting for the Cash They Were Counting On


Increasingly, the fabric of families is being torn apart over inheritance feuds.

"As the economy has gotten worse, there is less money to spread around, so feuding and disputing wills have increased," says Jean Gordon Carter, a partner with the law firm of Hunton & Williams.

Then too, points out attorney and certified financial planner Rial Moulton, many baby boomers have been counting on those inheritances to help finance their retirements, as they didn't do a good job of saving for themselves. Now, there's a bit of desperation in the air. "There are more feuds, and they are nasty," says Moulton, co-founder of Retirement & Tax Planning Specialists.

Also, people are leading lifestyles they can't sustain, says Ken Kamen, author of Reclaim Your Nest Egg: Take Control of Your Financial Future. "Kids run up bills they think they'll be able to pay off with their inheritance. When the money is bequeathed in a way they did not expect -- it went to a long-lost relative, charity or the cat -- the heir has a terrible problem."

Indeed, many children feel like they are entitled to their parents' money. "It's amazing how greedy folks can be with assets they didn't earn," says Carter.

The Emotional Dimension


Certainly, inheritance disputes are about the money, but often, they're also about a lot of other stuff. One source of conflict becoming more common involves blended families. There are a record number of second marriages now in which spouses bring kids from previous marriages. How much should those stepchildren or the second spouse receive?

"We see a lot of the sons- and daughters-in-law stirring the pot at the death of a parent," says Moulton. "The kids might not want to fight, but their spouses force them into it." The emotionally charged atmosphere of death can bring up old feelings of sibling rivalry, and some children will try to get in death what they feel they didn't get during the parent's lifetime.

A chief cause of division though, is often a lack of estate planning, and in some cases, poorly written estate planning documents. Family fights at an already heart-wrenching time can be avoided if you don't create surprises. A good place to start is with a conversation.

"Talk to your beneficiaries while you're alive to set the right expectations and to make them aware of their responsibilities and proper management steps when they do inherit. Tell your kids that if they fight later, you'll come back to haunt them. That's what I did, and my children laugh about it, but it makes the right impression," says Robert Fragasso of Fragasso Financial Advisors, who specializes in estate planning and managing inheritance funds.

Here are four pieces of advice for bequeathers -- and one for heirs -- to help avoid conflicts in the wake of a death.

1. Make a Will.
Nearly two-thirds of adult Americans don't even have a simple will, says Danielle Mayoras, attorney and co-author with Andrew Mayoras of Trial & Heirs: Famous Fortune Fights! Sure, you may be able to write a will yourself. But given the magnitude of what you're doing, it's worth getting an estate planning attorney's help. Also, avoid shortcuts like using joint bank accounts instead of a will or trust, or expressing wishes through a letter or verbally, she says.

Know too, that your documents will need updating to account for life events like marriages, divorce, new children or starting a business. And you would be wise to explicitly state who should receive personal items like family heirlooms. "We have seen long, expensive battles over mom's wedding ring or dad's guns. Address those personal and sentimental items in the plan," says Moulton.

2. Keep It Simple. "Don't come up with a plan that is so convoluted that it can't be executed properly and understood by those affected," says Gordon Carter. Also, having too many co-trustees is typically a nightmare when it comes time to handle parent's affairs, especially when children live in multiple states. "Name one [executor], with a successor plan in case that child cannot take on the role when the time comes, and communicate in advance why you are making these choices," advises Lynn Ballou, a certified financial planner with Ballou Plum Wealth Advisors.
3. Be Aware of Assets That Pass Outside of Probate. For example, if one child has their name on a parent's bank account, even if it's only to accommodate the elderly parent, the presumption is that the child inherits the account. Unless that is the parent's intent, the parent should instead give the child a power of attorney over the bank account. That prevents the account from passing a greater share of the parent's estate to that particular child, explains Rett Peaden, an attorney with Davis, Matthews & Quigley.

4. Leave Emotions Out of It. "Don't settle old scores from the grave, and don't try to control your kids from the grave by leaving
provisions in your will," says Kamen. "A will should not be used to make up for something you didn't give your children during [their] childhood," he adds. Know that litigation may occur when there is unequal treatment of siblings or unequal treatment of children from different marriages, warns financial planner Jeanne Brutman.

5. Get Help to Defuse a Bad Situation.
If you're an heir in the middle of an inheritance mess, and it's clear that the parties are unable to solve the situation among yourselves, call on professionals: accountants, attorneys, financial planners or even a therapist. "A therapist might be the right person to keep you from refighting battles of your childhood," says Kamen. "Many times these feuds have their roots in the 'mom loved you better' fights from long ago. Before you tear apart your family, get help."

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76 Comments

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GeriHolman

What about probate? How can I simplify this having a home and the kids inherit it after I pass. I understand that there is a waiting time, if probate isn't dealt. with ahead of time, assuming I understand this word probate. I understand it is the validity of a will, as I informed myself in the dictionary and I do have a will, Then is their any reason to be concerned?

June 25 2013 at 8:09 PM Report abuse rate up rate down Reply
cagross890

If you want to learn how to keep all your parents assets from a sister or brother check with tom or chuck gamble of moorestown nj. They know how to do it.

March 01 2011 at 2:35 PM Report abuse rate up rate down Reply
leadfoot494

aaaaaaaaaaaaaah the hell with them all last one standing gets everything

February 28 2011 at 6:28 PM Report abuse +1 rate up rate down Reply
dunlapjackie

Dad remarried and past away. the new wife kept all the money when originally it was to be divided up with the kids. Can you fight that?

February 28 2011 at 3:28 PM Report abuse +1 rate up rate down Reply
drdave415

Many lawyers will write a Will very cheap, knowing that the children will probably use the same law firm to probate the Will. In TN, lawyers can keep up to 5% of the estate for handling a little paperwork. Find out what they charge and get it in writing before hiring an attorney

February 28 2011 at 10:35 AM Report abuse rate up rate down Reply
drdave415

Watch out for the lawyers. Our lawyer in my dad's estate, old family friend, declined signing a letter stating his charges, as "the work was not enough to warrant such a thing." After receiving a bill for $18,000 and complaining that he had rewritten my mom's Will unnecessarily, he threatened to sue me for 5% of my Dad's estate, and quoted the legal law saying he could do so. Nice guy. Never trust a lawyer

February 28 2011 at 10:33 AM Report abuse rate up rate down Reply
cdarrellgzmryz

My parents made out their will. I get half of everything; my brother gets the other half. No fighting, no arguing (I hope!). Because my parents are nice and love their children and grandchildren, they want to leave an inheritence for us. That has taught me to be the same way, kind and generous. So in turn, I want to do the same for my children.

February 27 2011 at 5:13 PM Report abuse +2 rate up rate down Reply
2 replies to cdarrellgzmryz's comment
Franco

You say that now. But if one of you winds up taking care of a disabled parent for five years, you think you are still entitled to half? Good luck!!

February 27 2011 at 6:18 PM Report abuse -1 rate up rate down Reply
cdarrellgzmryz

@Franco. You obviously didn't read my comment very well, or just didn't understand it. If that happens ( a disabled parent ); we will both take care of them. We would hire a nurse and do what it took to care for them. That's just the way were are. BTW, we would never ever put anybody in a senior citizens home. I grew up in a very caring, loving, and forgiving family, cousins, aunts, and uncles etc. We are not callous!

February 27 2011 at 6:45 PM Report abuse +2 rate up rate down Reply
suwun

Fighting over inheritance, unions fighting to keep bargaining rights etc. What do they all have in common? They're all fighting to get someone else's money. Is this the new American way? Sorry, but inheritance is not a right but whatever Mom and Dad (or whomever is giving the inheritance) money to give to whomever they please (or spend it all themselves and leave nothing). Public unions, the same thing - it's not "the government", it's us, the taxpayers that they are squeezing for more and more - and taking advantage of lawmakers who will negotiate with them and get some back in reelection campaigns. Be glad you have something coming to help with the bills if you are lucky.

February 27 2011 at 4:45 PM Report abuse -1 rate up rate down Reply
white41990

I got mine setup so all property and money in my name is given to charity 100%. I never got anything from my parents, why should I leave my kids anything? The best thing I gave them was life, if that ant good enough well then thats to bad, plus if they need my money by the time I am gone then I guess thats another reason to leave them nothing, if you cant manage what you got why should I add to the problem?

February 27 2011 at 4:29 PM Report abuse -3 rate up rate down Reply
2 replies to white41990's comment
dukie97

Maybe you could spend some of your money on yourself before you go... like for typing lessons.

February 27 2011 at 4:51 PM Report abuse +3 rate up rate down Reply
Franco

Lol, dukie.

February 27 2011 at 6:19 PM Report abuse +1 rate up rate down Reply
fred

My wife and I have two great full grown kids with families of their own. Our paper work for our deaths are in order. BUT They WILL have to fight over one thing: I bought a 2006 Shelby GT H Mustang that I will enjoy 'til my loving kids take away my driver's liscense!! LOL

February 27 2011 at 4:00 PM Report abuse +2 rate up rate down Reply
1 reply to fred's comment
leadfoot494

party pooooooooooooper

February 28 2011 at 6:29 PM Report abuse rate up rate down Reply