Family discord that results in a will or trust contest can be costly, time-consuming, and emotionally painful for your client’s family. For you, the advisor, this disharmony usually leads to severely damaged relationships and a loss of assets under management. As we approach the holiday season and close 2017, it’s important to keep a close eye on your clients’ familial rifts and work with us to use proactive planning to mitigate the risk of potential litigation.
Sometimes the holidays bring out the best behavior in a family, but other times they can serve to highlight the division and risk of conflict. Although no one wants to think about this issue at this time of year, it’s worth being educated as an advisor so you can have a discussion point while everything is still top of mind for your clients after New Years.
Let’s say your client Robert has worked with you for many years. You’ve built a solid relationship with Robert and his family, and now manage the assets of all three of his children as well. You’ve worked hard to develop a solid rapport based in trust and transparency with the family.
Robert’s children believe they were listed as beneficiaries in Robert’s estate plan, but they will only know for sure what they’re inheriting when Robert passes away. The scenarios that lead to conflict can be virtually limitless, but here are few “common” ones:
This feeling of entitlement is likely enmeshed with all the other strong emotions that surround family ties. But, after the death of a family member, disgruntled family members may be inspired to take action and contest the will or trust in one or more of the following ways:
Planning Tip: Not everyone involved in a client’s life will have standing to challenge the validity of the client’s estate plan. Even if you suspect that the will or trust of a client is invalid, you will not have standing to contest it (unless you are one of the client’s heirs at law or named in the client’s prior will or trust). To best protect clients who struggle with family conflict, make sure to work with us to address any concerns or issues you are witnessing.
Proactive planning that’s mindful of the potential for family conflict is necessary to ensure that your clients’ wishes are honored and aren’t set aside by a disgruntled or estranged heir. Each case is unique and the exact strategies and tactics will always depend on the situation. However, it is possible to design a plan that’s equitable, takes into account the family dynamics, and reduces the risk of lawsuits.
Advise your clients against taking a do-it-yourself approach to any component of their estate plans. Working with a professional can give your clients the peace of mind that their wishes are being carried out and possible pitfalls are being addressed before they become major issues. Family conflict may be a touchy subject, but it’s an important topic to discuss with your clients. Ask them whether they see the possibility of disputes so you can help guard against them in their estate planning endeavors.
Another key tip is to encourage your clients to keep their estate plans up-to-date — remind them that estate planning is an ongoing process that continues to set them up for success in having their wishes carried out, even in the face of changing family dynamics. A current, proactive, and strategic estate plan is your client’s best defense against their wealth being squandered by family conflict.