Many people who are expecting a windfall after a loved one has passed on are often disappointed to see their inheritance eaten away by disputes. Those who are estate planning and people who are set to inherit from the estate should know about potential problems and be prepared for them with sound legal advice.
A TD Wealth poll of industry professionals shows that family conflict is a substantial hindrance to an estate plan. 109 accountants, trust officers and attorneys took part and said that issues such as ex-spouses, children from various marriages, younger spouses, and families that are blended creates problems with the estate plan. Those who are expecting to receive a big chunk of an estate can be disappointed if the plan does not address these issues.
Testators who avoid a comprehensive estate plan are making a mistake. The estate plan is the guideline that will be used to divide the assets. Failing to have a will – dying intestate – leaves the heirs in limbo as the state will determine how the estate is handled. For many testators, it is preferable to keep family members uninvolved in the estate planning process. However, it can be advisable to have the family members aware of how the estate plan splits the assets. This is especially true if there is property with high value at stake. Some might take the establishment of a trust as an affront to them, but letting them know the purpose of such a step can avoid the conflict that comes about in many situations.
Updating the document is critical. Since there were major changes to the estate tax exemption under President Trump and it now sits at $11.2 million, that can have an influence on how an estate plan is handled. If a divorce takes place, it will be necessary to update the document to reflect that. The same holds true if children and grandchildren are born and the testator would like to ensure they are named in the estate documents.
Whether the goal is to create a will, a trust, to pass assets to heirs or other strategies, having legal help is imperative to any estate plan. Understanding various aspects such as probate, the executor, and how to allocate various parts of the portfolio can be accomplished with experienced legal help. When crafting an estate plan, this is the first step that should be taken and can go a long way in avoiding conflict.
Source: cnbc.com, “Say hello to the No. 1 threat to your $11 million inheritance,” Darla Mercado, April 11, 2018