Estate Planning Amid Family Estrangement: Limiting the Fallout
It’s your money, and you decide how to pass it on, but when family tension is involved, it’s better to explain your plan rather than force your kids to live with the aftermath.
Howard Sharfman
It’s an unfortunate reality that estrangement from family members can be relatively common in our society. Cornell University sociologist Karl Pillemer recently surveyed 1,300 Americans and discovered that 27% of them had cut off contact with a relative. Of this total, 10% reported being estranged from a parent or child, 8% from a sibling and 9% from extended-family members such as cousins, aunts, uncles, grandparents, nieces or nephews.
Apart from the emotional hardship these situations can create, they also carry significant implications for estate planning. Our previous article, Estate Planning and Unequal Inheritances: Talking Is Key, covered how family circumstances might dictate unequal treatment of children in estate planning. Estrangement can be a powerful factor in those decisions. Take a couple who have two children but a strained relationship with their daughter. Their strong distaste for her husband (a feeling that is mutual) has led them to decide to leave nearly all the estate to their son and just a little money to their daughter.
Opportunity for explanation
When clients plan to treat children unequally in their estate plan, I ask, “Do your kids know that you plan on doing this?” I strongly recommend they tell them. First, there is the selfish aspect that I don’t want to be the messenger of bad news after the client has passed away. Don’t create a situation where a child might be thinking there will be a 50/50 split of the estate between them and their sibling, only to discover after you pass away that the split is 95/5.
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Second, intentionally having that conversation with family allows an opportunity for explanations to be made and expectations to be set, and the disfavored child can plead his or her case.
I also tell clients that it’s their money, and they decide how to pass it on. Their decisions don’t have to be fair because “life isn’t fair,” and the concept of fair is subjective anyway. It doesn’t necessarily mean equal.
Averting ill will
Beyond explanations and expectations, having a discussion while the client is still alive can also avert nasty and expensive fights among family members after the client’s death. Unexpected disparate treatment can lead one child to believe that siblings persuaded the parents to treat them unequally. In that circumstance, they might decide to sue and claim the will is invalid because of undue influence.
People can often spend years making claims that their parents disinherited them, left everything to a sibling who persuaded the parent to treat them unequally. They even go as far as challenging attorneys and judges for malpractice.
I would advise these people to just move on, because they likely won’t get anywhere by pursuing this course of action and will ultimately wind up wasting time and money. But consider how different things might be if the parent or parents in this hypothetical situation had just said to the child while they were alive, “This is what I’m going to do with the estate plan. I understand you may not like it, but here are my reasons why.” At the very least, they’d have some closure and probably wouldn’t still be fixated years later on the idea that their sibling had wronged them.
Avoiding litigation
When I craft estate plans, one of my goals is to head off future litigation. That includes not exacerbating strained relationships within families, but also not straining other relationships. If my client doesn’t get along with his son, for example, let’s not also create a fight between the son and his siblings.
While litigation over estate plans is widespread and comes in many forms, I find that it’s often more about sore feelings than legal rights. There tends to be some deep-seated issues between siblings that might go back decades, long before the parents passed away.
There’s also the human element of litigation to consider. Lawsuits can elevate family squabbles to a much more damaging and hurtful level. Even if someone wins the battle, will they lose the war? Will going through that process harden them and ruin any chance of reconciliation with a sibling?
There can be many shades of gray in human interaction and many ways for people to find common ground. As a parent, having open conversations with your children about your estate plan before you pass away might be the most critical step you can take to encourage family harmony afterward, or at least head off litigation. And in cases of current estrangement, taking the time to engage in that conversation could even help alleviate tension.
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