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Avoid These 2 Pitfalls to Help Your Family Successfully Execute Your Estate Plan

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Estate & Trust

There are few things more certain in life than death and taxes, yet both subjects tend to be a very private subject for the lion share of my clients. When attempting to broach the conversation of wealth transfer or estate planning, I often hear things such as:

“I’m not worried about it, I’ll be dead.”

“My son/daughter is a smart cookie — they’ll deal with it.”

“I think my kids know where everything is going.”

After eight years of practice in the area of Estate and Trust planning and compliance, I can tell you that “Estate Plans” with no communication to the beneficiaries are rarely carried out flawlessly.

There are many pitfalls that lead to stalled, contentious, and inequitable Estate Plans — with or without communication to the beneficiaries about one’s plan. I would like to cover two of these pitfalls, and share some thoughts on why they lead to poorly executed Estate Plans.

Pitfall #1: Co-Trustees

Co-trustees often arise when there are siblings as beneficiaries. The grantors of the Estate (Mom or Dad) can’t choose one sibling over the other to be in-charge, or they believe that they will have no problem working together. Yet sometimes, parents can forget about sibling rivalries from childhood. Even the best of siblings can still squabble, and siblings with a good relationship can still experience tension just getting through a family Thanksgiving dinner. Perhaps Mom & Dad aren’t remembering that, as co-trustees, their adult children will need to get along for six to eighteen months in order to administer the plan. Successfully administering an Estate Plan requires timely decisions, signatures, and thoughtful action. Adding an additional party to this process will require more time for review and agreement regarding what is to be done next.

What to do?

Discuss with your children who is to be the Trustee. Check for willingness and interest in a co-trustee arrangement. Take the time to explain that, if a co-trustee arrangement is made, they will need to agree on each step before it can be taken, and that it will add time to settling the Estate. Having the conversation with your adult children now will set them up for success in the future, because they will have a clear understanding of your wishes and what is expected of them.

Pitfall #2: Uneven Bequests and Distributions

Often Mom or Dad have reasons to leave something significant to someone special. Common items are wedding rings, guns, or an old mixing bowl used to make Sunday-morning biscuits. Other items include beach houses, rental houses, or specific tradable securities. In my experience, the greater the difference in value between distributions to beneficiaries, the more likely that litigation and/or stalled Estate Administration will occur.

What to do?

This one is pretty short and sweet — tell your children what you are doing. If you don’t have the conversation, you allow for your children to come up with their own reasons for why you preferred one sibling over the other. Two common beliefs arise for the slighted sibling:

  • Mom or Dad liked the other sibling more, or
  • My other sibling convinced Mom or Dad to leave them more.

Both thoughts are bad situations to put your beneficiaries in after you are gone.

At the root of most Estate Planning problems you will find poor commination. We love our children and beneficiaries, so we should tell them our wishes enough times that they will remember them. Simply communicating will help lead to your family’s continued cooperation after you pass on.

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