Communication During Life Keeps the Family Peace after Death by Rick Bazzani, CPA
Posted on May 14, 2015
The lives and deaths of celebrities offer practical lessons in the dos and don’ts of estate planning. Consider musician Jimi Hendrix, who died without a will, leaving his estate in a perpetuate state of litigation for more than 30 years. Actor Phillip Seymour Hoffman passed away in 2014 without updating his will to include his children nor addressing the considerable estate taxes his companion, not his legal spouse, would incur. More recently, within months of actor Robin William’s tragic suicide, his survivors took to the courts to battle over many of his personal belongings.
Unlike Hendrix and Hoffman, Williams had a will and an estate plan that he updated to meet his changing family circumstances, which, at the time of his death included three children and a third wife. However, while Williams shrewdly established a trust through which his assets could pass to his heirs, his estate plan failed to address his small-ticket possessions that carry far greater sentimental value than any item of high monetary worth.
In each of the situations, grief quickly gave way to family infighting due to non-existent or incomplete estate plans that did not consider the preservation of peace and unity amongst surviving family members after one’s death. Ironically, even those individuals who take the time to develop a comprehensive estate plan can disrupt family harmony when they neglect to take one simple step: communicate their wishes while they are alive.
Death and the transfer of assets upon one’s passing are perhaps the most difficult topics of discussion. They can become more complicated and emotional when opened up for conversation among family members, whose inheritance expectation may not align with one’s estate plan. Avoiding the discussion entirely, however, is a bad idea. As challenging as it may seem, such a conversation can help family members understand and accept one’s final wishes and prepare themselves to manage the family’s business and wealth into the future.
Have a Plan
Establishing an estate plan requires individuals to take stock of all their assets, including financial accounts, real estate, personal property and business assets; to document beneficiaries to whom they wish to pass the assets; and to designate a financial fiduciary to oversee the ongoing management of the assets and related trusts upon their death. It requires a commitment of time that should be approached with the assistance of a lawyer, a financial advisor and an accountant, who together can provide guidance regarding the multitude of legal and tax implications of each decision. Moreover, these professionals can help to establish a series of checks and balances that will help minimize conflicts in the future, including the provisions of no contest clauses or mediation/arbitration clauses.
Communicate Your Goals and Wishes
Once decisions are made regarding the planned transfer of assets, individuals should share their plans with family members who are mature enough to engage in such a conversation. It is important that individuals define their goals and what they hope their estate plans will accomplish. Asking for the input of named beneficiaries will often help to build consensus and minimize or even eliminate misunderstandings, resentment and family discord in the future.
Recognize what is Important
Often, the biggest source of contention between surviving family members is not the pricey Picasso hanging in one’s entryway, but rather the small, inexpensive tokens that hold precious emotional value. Sibling squabbles can erupt over the ugly Christmas sweater worn every year or the collection of wine corks proudly displayed in one’s office. Ask what is important to each beneficiary and make attempts to accommodate their requests.
As harmonious as one hopes his or her family is, the fact is that death and inheritance can bring about discord and bitterness and lead to acrimonious battles between beneficiaries. Moreover, what one family member may consider fair and equitable may be perceived as unreasonable and imbalanced to another. Individuals should try to anticipate all the possible scenarios that will occur based upon their plans and recognize that fair does not always mean equitable. There are times when a decision must be made for the benefit of the entirety of the estate, rather than to quell an heir’s hurt feelings.
Addressing end-of-life plans and asset transfers with the aid of professional counsel are difficult but important steps in leaving a lasting legacy. While it may be a lengthy process fraught with difficult decisions, the end result will go a long way to protect one’s assets and family members from future frustration, expense and battles over personal possessions. Moreover, it will help to prepare family members to take over the financial management of an estate and keep it thriving for future generations.
About the Author: Rick D. Bazzani, CPA, is a senior manager in Berkowitz Pollack Brant’s Tax Services practice. He can be reached in the firm’s Ft. Lauderdale CPA office (954) 712-7000 or at firstname.lastname@example.org.