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Avoid Family Conflicts During Estate Planning

Great information on estate planning. I pasted in some details for you, but follow the link for the full story. Estate sales and/or written appraisals can be an important component of the division of assets. Call me for a free consult when you need help with personal property or business asset liquidation and appraisals: 661-474-7201.

Avoiding Family Conflicts During Estate Planning | Estate Planning content from WealthManagement.com.

Excerpt: Unfortunately, estate planning can also cause family feuds over inheritance, often leading to litigation that can become lengthy and costly with no clear winner. From our experience, family litigation occurs not from a lack of trying to solve the issue, but from a lack of planning. Below are key tactics we suggest to help take advantage of potential tax cuts, as well as to avoid family battles over wealth transfers.

  • Overcome the concept of fairness. One of the most common issues is when parents try to be “fair” in order to ensure their children get along. In this situation, the parents are also typically trying to protect and keep the legacy asset, whether it is a business or a home, in the family and on a growth trajectory. If one sibling is invested and interested in the family business, while the other sibling is not interested ... splitting the business “fairly” between the two siblings, i.e. giving each sibling an equal portion of the business, is likely to cause tension ...
  • Transfer assets based on a natural flow. Instead of transferring assets equally, focus on what makes sense for the individual you are transferring the asset to. For example, if only one sibling is interested in the family business, he or she should be considered to own the family business in the future. If the other sibling is not interested in the business, other mechanisms can be set into place for transferring different assets to that child.
  • Protect family assets. Each sibling's desires and needs are different.  The individual might be young with other goals, might not have the same interests as the family, or might have special needs. In these situations, certain mechanisms such as trusts can be set up to protect both the individual and the family assets. For example, an individual can receive income for life and have a trustee appointed to manage the financial assets.
  • Make major decisions with every family member in the room. When it comes to transferring assets or discussing the future, the family needs to be on the same page. Not doing so can lead to family tension and legal battles in the future. ...
  • Do not wait for the original founder of the family business, or a parent, to pass away. A simple fact: the more you talk now, the better it will be for your family’s future. Many problems arise after the individual who has the majority of the wealth is out of the picture. When mom or dad doesn’t address an issue, the siblings begin to feud.
  • Evaluate what you can and can’t afford to transfer. The first step in beginning the estate planning process is to get an estimated current value of the asset portfolio of the estate. Determine the assets that are more likely to appreciate in value, giving considerations to those that also carry other intangible values, such as the family legacy. ...
  • Treat estate planning as an ongoing process. Every individual has life-changing events - marriage, children, divorce, sale of a business, stock options, IPO - along with changes in beneficiaries. We often refer to this as a “milestone review.” When a financial or significant life milestone occurs it is critical that the estate plan is updated. ...
  • Pick the right professional advisor. Estate planning is a very personal business for both the advisor and the individual client. Look for someone you trust who will bring a personal interest to the relationship. As gifting involves giving up some control and is not something that can easily be reversed, understanding family dynamics and getting family members comfortable in all facets of the gift is important.

Communication and coordination are essential to make sure the overall tax, financial and personal outcomes are the best in the current tax regime. Keep in mind assistance from multiple advisors will be needed during this process. Trusted professional advisors can bring significant value in helping to select the best assets to transfer, for example, attorneys are essential to producing the legal documents needed to carry out the intention of the estate plan.

When planning one’s estate, don’t delay discussions about difficult inheritance and wealth transfer issues.  A family willing to have an honest and open discussion now will avoid scorched relationships and negative financial impact later.  ...