So, you’ve taken the time to put together a will and/or trust. Even so, there are some problems that might pop up after you’ve passed away… and when you’re no longer able to be part of the conversation. Family fights over who gets what could lead to major drama, expensive trips to court, and a significant hit to the personal and financial legacy you leave behind. The good news is that there are a some planning techniques you can implement to reduce or eliminate the risk of these problems, making sure your estate plan documents actually do what you want them to do.
1. Distribute personal items through specific gifts.
Cash is pretty easy to divide. But your “stuff”… your personally or monetarily valuable household goods or family heirlooms… can be difficult to put a value on, especially without costly appraisals. Simply stating in your will or trust that your tangible personal property and household goods go to your heirs in equal shares may not provide enough clarity. In fact, it may create tensions when more than one beneficiary wants a specific item. And the real value of certain things isn’t just about an appraisal – it’s also about emotions and memories. We recommend you have a chat with your family members to figure out what certain items mean to them. If you really want to avoid fights over who gets the coffee table or grandma’s candy dish, you can get very specific in your will or trust about who gets what. Don’t rely on promises or sticky notes.
2. Treat your children equally.
You might be considering whether it’s a good idea to divide your estate equally evenly. Are there family dynamics that justify a different result? However, if you want your estate to go as smoothly as possible, an equal split may be the right move. Let’s say you have two children – just give each of them half of the estate. And if one of your children isn’t especially good with finances, you could structure a trust for them. The trust is a tool that protects their inheritance for them and from them, on your terms. Someone you trust – like a friend or family member – could be in charge of managing the trust for them. This trust can also dictate how the money can be used, even incentivizing certain behavior (e.g. staying sober, maintaining a full-time job, etc.). With respect to who is in control of your estate, choose roles based on trustworthiness and skillset. But, to avoid anyone feeling unfavored or less-than, you could name your attorney or a bank as executor or Trustee.
3. Keep track of gifts made during life.
If you have already gifted money or another asset to a family member, make sure to account for it in your plan. If your goal is to treat all your children equally, you very well may need to address these gifts in your plan documents. You do this by classifying a gift as an “advancement.” An “advancement” is defined as a lifetime gift that a person gives to a beneficiary with the intent that the value of that gift will be deducted from that beneficiary’s inheritance after the gift giver’s passing. The value of the gift will count as part of the inheritance you leave to that beneficiary. For example, if you gave your son $25,000 toward a down payment on the purchase of his home, you would specifically state under his share in your will or trust “less $25,000 gifted for down payment on home during my lifetime.” There are other provisions in your plan documents necessary to make an advancement work, but this gives you the idea of the basic framework.
4. Use a “No Contest Clause” in your will or trust.
Typically, a “no-contest clause” (or, if you like Latin (note: we don’t), an in terrorem clause) will state that if a beneficiary challenges the validity of the will or trust and fails, that beneficiary will forfeit any inheritance they would have otherwise received. The clause acts as a threat and strongly discourages those who may want to challenge your express wishes or finagle a larger inheritance. If you have an intended beneficiary you believe may create conflict, using an effectively-drafted no-contest clause can help prevent a costly and contentious fight after you’ve passed away.
5. Disinherit heirs effectively.
Expressly leaving certain family members out of your will or trust very likely will create conflict after you’ve passed away. If the disinheritance is justified, be sure to CLEARLY indicate that the beneficiary is disinherited in your will or trust. In lieu of disinheriting someone, it may be beneficial to name that as a beneficiary of a sum just large enough (a carrot, so to speak), when taken in conjunction with a no-contest clause, may be enough to get the beneficiary to accept his or her inheritance and move on without incurring legal fees and risk getting nothing. If you anticipate a fight, you may want to consider an independent executor or trustee who is not swayed by emotions either.
6. Prove your capacity to make a will or trust.
Those who contest a will or trust often claim the maker of the will or trust was incompetent or under duress at time of execution. To avoid this situation in your estate planning process, you might consider getting a medical evaluation done concurrently to the time you are creating these documents, which will confirm you are mentally competent and able understand the nature and consequences of signing a will or creating a trust. This evaluation can be included in the will or trust. Or if there is a challenge, your executor or trustee can present the evaluation to a court. Ohio even has a mechanism to prove the validity of a will while you’re alive (Chapter 5817 of the Ohio Revised Code). This process can be very valuable for certain families.
7. Use competent counsel.
If you’re worried about a fight over your estate, don’t rely on cheap DIY packages or cookie-cutter documents. Get some advice from someone who understands these issues and can discuss creative solutions with you. In Ohio, there are about 150 attorneys who are Board Certified in Estate Planning, Trust & Probate Law by the Ohio State Bar Association. It may be beneficial to connect with one of these specialist practitioners rather than taking a shortcut to save a few dollars today.
If you’d like to talk to a Board Certified Estate Planning Attorney about your estate plan – and how to structure it to minimize the risk of fights among your beneficiaries and heirs – we welcome you to reach out. HM Law is happy to have a conversation with you. Let’s Talk!