Estate Planning
Some Practical Ideas For Your Will 
Or, How to keep your family from fighting over money. .

The more money you hope to pass along to loved ones, the greater the chance that your children will fight over it. As Auctioneers and Brokers we have witnessed that even close-knit families aren't immune.

Contesting a will can hold up the distribution of assets for years. Even worse, it never resolves the emotional issues that underlie most inheritance fights, such as which child was loved most.

To reduce the likely hood of bitter legal disputes in your family after you are gone...

There will be fewer hard feelings if you can treat each heir equally or require the assets be sold and the proceeds distributed equally.  Many parents leave the largest share of their estate to the child who makes the least money. Or they put the inheritance of a free-spending child in a trust with stipulations but leave assets to his/her siblings free and clear.

Problem:    Grown children often equate their inheritances with the depth of their parents' love. Children who feel they were shortchanged might sue because they believe that their siblings must have manipulated the parent.

Exception: Wills involving farmland or family businesses. It's difficult to treat children equally if they don't all have an active interest in operating the company. If you have land or a family business, meet with your accountant and estate attorney to discuss business succession planning as well as distribution of non-business assets among family members. If the farm or business is an important family asset, look into life insurance trusts or consider requiring the sale of the farm or business at auction to let the participating family members buy at a fair price while insuring those that want out will get a fair price. 

Reveal big surprises before you put them in your will.  Discussions about inheritances are taboo in most families. While it's not necessary to tell your children exactly what you're planning to leave to them, make them aware of out-of-the ordinary decisions, such as unexpected large gifts to charity or to one child.

If you don't disclose the gifts in ad­vance, it is easier for one of your children to contest the will. Courts often agree to hear a will contest if one child appears to be unusually favored over another without explanation.

Explain your motivation in the will itself. You might write--"Son, I am leaving your sister the lake property because she will use it more. This may seem unfair, but it doesn't mean that I love you any less. It gives me great pleasure to know that she and the children will get to enjoy it. Since you and Marie work such long hours in your business, you have hardly spent any time there anyway. I appreciate your under­standing of my wishes."

Don't go into extensive detail. You risk slandering one of your heirs, which can give him/her an excuse to challenge your will.

Helpful: A well-drafted "no-contest" clause in a will--which automatically disinherits any recipient who challenges the document--is worth including, but it is no guarantee there won't be a fight. Beneficiaries might contest the will anyway, and many probate courts refuse to honor no-contest clauses.

It may be best to give away sentimental objects now. We have witnessed heirs fighting over items that were of minor value, while settling the Estate went on and on and on. In some cases, the costs keep mounting and the heirs actually get substantially less in the end because of hard feelings over a sentimental item. 

You can sidestep such controversy by giving beloved personal items to family members while you are alive, especially heirlooms that you don't use or wear regularly. (Discuss tax ramifications with an adviser if you think beneficiaries will sell these items down the road.)  To avoid unhappy surprises, let each heir know what you are giving the others.

Don't unintentionally disinherit a child. Common scenario: Your will divides your estate equally among your children. When you fall ill and need help with such daily chores as cooking, shopping and paying bills, you rely on the child who lives closest to you. For convenience, you put the caregiver child's name jointly on your bank accounts. By law, these joint assets automatically pass to the caregiver child when you die, overriding your will-- and your other children are then short­ changed.

Better: Establish power-of-attorney accounts with banks and brokerage firms so that individuals you designate--your child, a trusted friend, an accountant--can write checks and make decisions about your money on your behalf without being a joint owner of your assets.

Also remember to change your will or include flexible language that allows for such tragic occurrences as the death of a child.

SPECIAL SITUATION: SECOND MARRIAGE

A second marriage can create unique inheritance-planning challenges. Smart Strategies...

Provide directly for children and grandchildren from your first marriage. Often, a father leaves everything to his second wife with the understanding that the second wife will provide for his chil­dren from his first marriage--but tak­ing this shortcut almost guarantees a will contest.

Better: Use marital trusts, such as a qualified terminal interest property (QTIP) trust, to earmark assets for your children upon your second spouse's death.

Choose a trusted nonbiased executor. Men often try to promote family harmony by making a second wife and one of the children from the first marriage co-executors of their estates or co-trustees of marital trusts. This just pits the second wife against the child over such issues as how to invest assets or manage the estate for survivors.

Better: Use a trusted nonbiased professional as executor or trustee if the will has trust provisions. Most local banks and attorneys offer this service to customers. Cost: Typically 1% to 2% of the estate's value on a sliding scale, based on the size of the estate. Tip: Be sure the trust is set up according to your wishes, not the trustee's. The trust should have a liquidation point at some time and not have to pay trustee fees forever.

To Keep Your Will From Being Disputed

Upon your death, the executor named in your will, for instance, your spouse, notifies all beneficiaries and files the will in state probate court. Probate is the legal process through which assets are dispersed according to your wishes.  Any interested party who objects to the will has a brief period, about 30 days from notice of probate, depending on the state, to commence a civil lawsuit demanding that the will be invalidated for cause.

Common causes: The deceased was incompetent or suffering from diminished mental capacity when the will was drawn up...  Or, the deceased was unduly influenced by one of the beneficiaries.

About 3% of wills in the US are contested each year. Out-of-court settlements are rare. Because of the extremely emotional nature of such family disputes, most cases go to trial. That is expensive, takes a very long time, the property may deteriorate and a large portion of your estate may be taken in costs.

Better: If you suspect that this could happen, we think a better plan is to liquidate the estate before you die, or to require that the assets be sold upon your death in the quickest manner possible (think professional auction) and the proceeds be divided, or at least wisely invested, while waiting for the court system to make a determination. 

THE PROFESSIONAL AUCTION, SUCH AS THOSE DONE BY ALLIANCE'S CERTIFIED ESTATE SPECIALISTS, MAY HAVE AN IMPORTANT PLACE IN YOUR ESTATE PLANNING. OFTEN FAMILIES CAN AVOID STRIFE, CONFLICT AND COSTS IF ASSETS ARE SOLD QUICKLY. A PROFESSIONAL AUCTION GUARANTEES THAT ANY HEIR CAN BID AND BUY AT A FAIR PRICE, WHILE GUARANTEEING THE HEIRS THAT DON'T WANT TO OWN OR MANAGE THOSE ASSETS WILL GET A FAIR PRICE AND THE CASH THEY DESERVE. "AND, THEY CAN STILL ENJOY THANKSGIVING AND CHRISTMAS TOGETHER. . ."