Inheriting assets can be a beautiful gesture, yet it sometimes sparks trouble and family issues in certain situations. When grieving, family members might clash over assets, especially if terms are unclear or beneficiaries are caught off guard by conditions.
Anticipating can alleviate these inheritance tensions. Here are strategies to minimize disputes before and after the passing of a loved one, easing potential conflicts over inheritance.
Ensure They Execute a Last Will and Testament
A will outlines how someone wants their property and assets distributed after they pass away. Having a will can prevent disagreements by clearly stating who gets what.
If someone passes away without leaving a last will (called dying intestate), the courts decide how to divide their belongings based on state laws. It can cause family disputes, remove control from your family, and heighten the likelihood of beneficiaries fighting in court.
It’s a good idea to ask your loved ones if they have a will and if it’s current. Encouraging them to share these instructions in advance can prevent surprises and potential conflicts among heirs after their passing.
Unfortunately, discovering unexpected details after someone’s death can lead to contentious battles over inheritance.
Use a Trust for Property Disposition
Creating a trust is another effective method to specify how property should be distributed after death. A parent can establish a revocable trust that allows changes until their passing, as long as they remain mentally capable. You can prevent family disputes over property with this step.
Jointly naming a parent and child on a property can also ensure a smooth transfer of assets to the child upon the parent’s death. This method can be applied to bank accounts, brokerage accounts, or real estate.
Opting for an executor or trustee who is not a sibling can also contribute to maintaining harmony. Choosing a third party with no personal stake in property distribution decisions might be wise, especially if a parent anticipates potential conflicts among siblings after their passing.
Clarify Beneficiary Designations
Not all assets pass through a will. Life insurance and retirement plans specify beneficiaries receiving death benefits after the policyholder’s passing. Keep issues in the family at bay by clarifying this matter ahead of time. Even if a will states otherwise, the beneficiary designation in these policies takes precedence.
For instance, if a loved one has divorced but still needs to update their ex-spouse as the beneficiary on their retirement plan, it’s essential to check if these instructions are current.
Additionally, your loved one should consider any banking or brokerage accounts where they’ve named someone as a co-owner. The co-owner retains ownership of the account after the person’s passing, regardless of what the will dictates.
Consider Donating Properties Inter Vivos
Parents might consider distributing particular possessions before passing to ensure their children can enjoy these items longer, thereby preventing potential family dispute over them after the parent’s death.
For instance, a parent with two daughters might gift each daughter rings, bracelets, or necklaces on occasions like birthdays or holidays.
This gifting approach hinges on the value of the items falling below the annual gift tax exclusion. In 2022, the exclusion was $16,000. In 2023, it increased to $17,000.
It means that individuals can gift up to $16,000 or $17,000 per person without incurring taxes on those gifts. Items exceeding this value would necessitate filing a gift tax return and might incur gift taxes.
Set Up a Living Will
Apart from a will, other critical documents can help prevent disagreements and ensure wishes are honored. Ask a lawyer for family dispute to help your loved one establish a living will, also known as an advanced directive.
This document outlines instructions for medical care in situations where they can’t communicate, like being in a coma. It can also designate someone to make healthcare decisions on their behalf. Having these directives in place can prevent tense arguments regarding end-of-life medical choices.
Additionally, setting up a financial power of attorney is advisable. This document appoints a trusted individual to manage finances in case of mental incapacity. Designating someone in advance helps avoid family issues over financial matters.
If concerns arise about a beneficiary’s ability to handle an inheritance, such as leaving a substantial sum to a young family member, creating a trust might be prudent. A trust is a legal entity that oversees property and assets on behalf of another person.
The person establishing the trust sets specific instructions governing distributions. For instance, they might stipulate that the beneficiary can access funds only after reaching a certain age, like 25.
Designate an Executor
An executor plays a crucial role in handling the final affairs of a deceased individual, which includes overseeing the distribution of their assets as stipulated in their will.
They can avert family disputes over property by managing the deceased person’s estate until all belongings are passed on to the designated beneficiaries. For instance, an executor might maintain the deceased person’s residence until it’s officially transferred to its new owner.
Selecting an executor is a significant decision that should be made thoughtfully. Your loved one must choose a responsible family member for this role. If they fail to designate an executor, a family member must petition the court for this responsibility.
If there are issues in the family about whether a family member can fulfill this role, your loved one may hire a professional, such as a lawyer, to serve as the executor.
Work With an Estate Planning Lawyer
Consider contacting Cristy J. Carbón-Gaul, an experienced lawyer who handles estate planning and probate cases. Her legal expertise is dedicated to navigating complex probate, trust, and estate matters, safeguarding her clients’ inheritances and financial well-being.
If you need to challenge a will or trust in New Mexico, we can provide valuable assistance. With a strong track record in probate litigation across the state, she has successfully negotiated settlements and jury verdicts.
Connect with her online. Cristy is committed to standing by her clients, fighting for their rights, and achieving favorable outcomes, free from family issues.