One of the main reasons clients consult with me about creating or updating their estate plan is to ensure that the settlement of their estate will go as smoothly and easily as possible, and that there won’t be any conflict among their heirs when they are gone. Here are five aspects of the estate plan decision-making process where controversies often arise.

1. Tangible personal property.     Your tangible personal property is your “stuff” – clothing, household contents, jewelry, artwork, car, collectibles, etc.  While I have some clients who have expensive artwork or jewelry, for most of them, the tangible personal property is not their most valuable asset.  Their most valuable assets are their homes, their IRAs and their other investments.  Yet it is the tangible personal property that family members most often fight over and about which children hold grudges for years.  In my opinion, there are a couple of reasons for this.  First, it can be difficult or impossible to divide up the tangible personal property.  There is only one diamond engagement ring or Norman Rockwell painting and, unlike a bank account or the proceeds from the sale of real estate, they are not divisible.  Second, these items  represent memories and emotions, so they are important to grieving family members.  One of the best ways to eliminate or reduce discord among family members is to write down to whom the valuable or sentimental items should be distributed.  In Massachusetts, you can do this by a separate, binding memorandum rather than including this in your Will.  You can modify the memorandum at any time, making it easy to keep it up to date.  When a person leaves written instructions regarding the distribution of tangible personal property, controversy among the surviving family members about those items is eliminated.

2. Joint accounts. In my experience, the following scenario is all too common.  After one parent dies, one or more of the adult children step up to help the surviving parent – let’s say that’s mom.  One day when mom and one of the children are at the bank, the bank teller advises mom that she should have someone else’s name on her bank accounts.  Child # 1 is standing there with mom and the next thing you know, Child # 1 is on mom’s bank account as a joint owner.  Then mom dies.  There is a presumption under the law that a jointly held account passes to the surviving joint owner upon the death of one joint owner.  Does the money in that account belong to Child # 1 or was her name on the account “for convenience” only?  Once mom is no longer around to clarify her intentions, this situation can create quite a hullabaloo among siblings.   By making her intentions clear about joint accounts in her Will, mom can eliminate the controversy that arises from this situation.

3. Treating beneficiaries differently.  Nothing creates more trouble among children than when the parents’ estate plan does not treat all of the children the same.  In some cases, treating children differently is vital to a child’s well-being.  This may be where a child has a substance abuse problem, is in the midst of a divorce or bankruptcy filing, or has disabilities that impair the child’s ability to manage assets or which may entitle the child to certain needs-based governmental benefits, to name a few.  Under those and other specific situations, leaving one child’s share in trust, or leaving assets to the child’s descendants rather than directly to the child is appropriate and important.  In other cases, a parent may leave assets unequally among children because the parent does not care for a child’s spouse, thinks a child has poor money management skills, or the parent wants to reward a child who provided extra care.  Treating children differently in those circumstances may be warranted; but doing so is likely to create bad blood among the surviving children and may result in years of litigation.

4. Choice of Personal Representative or Trustee. When naming the person who will serve as your Personal Representative, Trustee or other fiduciary, consider the qualities and characteristics that are important for these positions.  The person must be trustworthy, responsible, fair-minded, well-organized and be a good communicator.  If you choose a child because of birth order or gender, you may be setting the stage for disaster.   If none of your children are a good choice to serve as fiduciary, consider whether another family member (sibling, niece or nephew) or a close friend would be a good choice.  A person who serves as Personal Representative or Trustee is entitled to be compensated for the time spent attending to estate or trust matters.  If there is no one in your circle of friends and family who you would consider naming, then ask your attorney, accountant or financial advisor if he or she will serve in those roles.  Although there will be a fee to be paid from your estate to a professional fiduciary, in the long run this can be far less expensive than naming a person who is not suitable to serve as a fiduciary.

 

5. Lack of transparency and/or failure to keep beneficiaries informed. The job of the Personal Representative of a Will and the Trustee of a trust is to administer the estate or trust for the benefit of the beneficiaries. A Personal Representative and Trustee owe a “fiduciary duty” to the beneficiaries.   This means the Personal Representative and Trustee owe the highest duty of good faith and fair dealing to the beneficiaries.  When fiduciaries act in secret, fail to respond to questions from beneficiaries, and refuse to share relevant information or documentation, they raise the suspicions of the beneficiaries as to whether the fiduciary is properly performing its duties.  The best way to reduce suspicion and avoid accusations of mismanagement, or even malfeasance, is for the fiduciary to keep the beneficiaries informed as to the status of the estate and trust administration and to maintain open lines of communication.

Everyone’s situation is different and each person’s estate plan should promote the legacy that he or she wants to leave behind.  I have yet to meet anyone who wants to leave behind a legacy of bad feelings, broken relationships or endless litigation.  If family harmony is an important element of the legacy you want to leave, consider the impact your decisions will have and plan your estate accordingly.  An experienced estate planning attorney can guide you through these choices and alert you to areas of potential conflict.

Attorney Suzanne R. Sayward is certified as an Elder Law Attorney by the National Elder Law Foundation, a private organization whose standards for certification are not regulated by the Commonwealth of Massachusetts.  She is a partner with the Dedham firm of Samuel, Sayward & Baler LLC.  This article is not intended to provide legal advice or create or imply an attorney-client relationship. No information contained herein is a substitute for a personal consultation with an attorney. For more information visit www.ssbllc.com or call 781/461-1020. 

March 2016