Big or small, conflicts are normal when discussing inheritance. However, these are way to minimize problems.
Regularly update your estate plan
A change of circumstances prompts a change in estate plan. One example of such a change is divorce. Under the matrimonial laws of most states, will provisions and beneficiary designations that favor former spouses are considered invalid. However, the powers of a former spouse regarding financial or medical powers of attorney are unclear. Therefore, in case of divorce, former spouses should be stripped of all decision-making powers and be disinherited immediately.
Consider a pre- or post-nup agreement
Remarriage is one of the causes of conflicts related to inheritance. To minimize the problems at death, draw up a pre- or post nuptial agreement that indicates, in clear and specific terms, the claims of the beneficiaries, including the spouses as well as children from the previous marriage/s.
Keep away from joint ownership
Joint ownership, as in naming a beneficiary as a joint owner of a property, is inefficient and could put the donor in an uncertain position, such as exposure to the liabilities of the co-owner. Additionally, joint ownership that bestows irrevocable lifetime rights takes away the donor’s right to change his or her mind.
Leave clear instructions regarding personal properties
Because of its nature, personal property can often give rise to issues among the beneficiaries. To avoid conflicts, it is best to create a list that specifies personal property items and who will get each item as inheritance. Remember to describe each item in detail.
Identify gifts and loans clearly
Children undergoing financial difficulties sometimes seek help from their parents. Financial help given by the parents could be considered as gifts or loans and deciding which is which is the prerogative of the parent/s. However, unpaid loans can be a source of conflict between siblings so the estate plan should clearly indicate how lifetime advances are to be treated. Take note that gift taxes may apply.
Appoint a fiduciary committee
Instead of appointing one fiduciary to settle your estate, name a committee. Having two or more people divide the responsibility of gathering your assets and settling tax obligations and other debts will minimize misunderstandings between the fiduciary committee and beneficiaries. As long as the members of the committee could work well together, this is something to consider. If appointing a committee is not possible and you don’t want to place all the hard work on one individual, mediation could be the answer.
Keep estate plans private
As the author of your estate plan, you are under no obligation to reveal its contents to your beneficiaries. Except for your living will, the specific details of your estate plan should be kept private while you are still living so you are free to change the provisions in any way you deem fit. In fact, being open to the possibility that your estate plan isn’t final until you can no longer change it is one of the keys to successful estate planning.
Take out a PPI insurance
A Payment Protection Insurance ensures there will be money to pay monthly repayments on credit cards, mortgages, loans, and others. Taking out a PPI insurance will help avoid questions as to who must shoulder these payments while the probate process is ongoing.
Plan funeral details in advance
Planning one’s funeral seems morbid to most people, which is probably why not many do it. However, leaving clear and written instructions about funeral arrangements and form of interment can help avoid conflicts.
It’s hard to think about leaving your loved ones behind, but the idea of having your loved ones fight over their inheritance is even harder. Minimize inheritance conflicts through careful estate planning.