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Conflicts of Interest in Estate Planning: Everything You Need to Know

Conflicts of Interest in Estate Planning: Everything You Need to Know

Estate planning can be a complicated and overwhelming endeavor. It often involves complex issues with extended families and blended families, and often brings about conflicts of interest as family members discuss what assets go where and who should be the designated successor trustee. 

Avoiding Problems During Estate Planning

As a top Orange County estate planning attorney, we at Parker Law Offices have served clients from all walks of life and understand the conflicts that can arise when determining these important considerations. 

Estate planning difficulties usually arise out of differences of opinion. Fortunately, those differences can usually be settled through thoughtful planning. Let's take a look at the most common conflicts of interest and how to overcome them. 

Beneficiaries

A survey conducted by TD Wealth found that the leading threat to estate planning is family conflict. 

Respondents cited designating beneficiaries as the number one cause of conflict, followed by the contention that arises from blended families and lack of communication among family members. 

Determining which family members receive what assets can lead the closest of families into heated debates. While money plays a major role, you would be surprised at how often the debate isn't really about money, but love.  For example, Mom's wedding ring symbolizes the connectedness and security of a family, and both siblings want it.

In order to keep your children from heading to the courts to fight, it's important to have all assets, including family heirlooms or objects with emotional attachments, listed in the trust. The instructions in the trust ensure that all parties understand what your wishes are.

What happens, however, when you and your spouse disagree about who should receive what?

Your Orange County estate planning lawyer can advise you and your family on what is customary in certain situations. Discuss your options and concerns with your attorney who has prepared countless estate plans and witnessed so many that have led to peaceful resolutions and have avoided embittered battles because of properly prepared estate plans having been put into place. 

Blended Families

Approximately 40% of married couples in the U.S. with children are defined as step-couples. This term of the 20th century refers to families in which at least one of the partners has a child from a previous relationship. 

Unfortunately, this family composition is the third leading threat to estate planning. One party wants their birth son designated as the successor trustee, while the other wants his or her birth daughter designated. 

Children from previous relationships, and the complex bonds from those family connections, can make this conversation particularly difficult to settle.

If one of the parties does not approve of the trustee the other party is set on, an alternative trustee needs to be discussed. The role of trustee is an important fiduciary position and should be designated for only the person who is most trustworthy.

One of the many benefits of a trust is it protects the estate from going through probate, potentially saving your family a tremendous amount of time and money. This also means that the court will most likely not be involved and will not be overseeing the actions of the trustee--or making decisions on behalf of those who may inherit from the estate. 

If the successor trustee finds it tempting to take more than his or her rightful share of the estate as determined by the trust, family members can end up in court at a substantial cost in terms of both money, time, and emotions to all involved.

Communication

Communication about estate planning topics can be difficult even in the best of situations. Having a conversation involving money, assets, and death can throw many families into heated controversy. 

For some families, bringing an unrelated third party to the table can reduce emotional turmoil and ease conflict. Similar to coming together with your financial advisor or a trusted family friend who does not have any stake in the outcome, meeting with your estate planning attorney can help provide a neutral, unbiased perspective. 

Successor Trustees

Couples will need to decide who they will designate as the successor trustee. This is the person responsible for managing and protecting the assets as well as distributing them to the beneficiaries. 

The role of successor trustee should be entrusted to the most dependable and trustworthy family member. Unfortunately, couples do not always agree on who will best represent them and take care of the many responsibilities in an appropriate manner. 

To complicate matters, some families opt to have more than one person take on this role, or fail to designate a back-up trustee should the first successor become ill or find the many responsibilities overwhelming.

Discuss this important decision over with your estate planning lawyer Orange County CA. You will be able to confidently cover essential topics including provisions that allow, or do not allow, your beneficiaries to replace the trustee with someone of their choosing.

Guardianship

Choosing a guardian for your minor children will enable someone to care for them should something happen to both parents, might result in tremendous family tensions. There is, after all, much at stake. 

If left undecided, or not legally documented, the decision rests with the court. If no family member steps forward that the judge deems a presentable parent, the children could be placed in Child Protective Services. 

Some considerations include choosing a person that currently has a loving relationship with the child. For some families, this individual may be a close family member or distant relative; for others, they may be a friend. 

Don't let "lack of blood relations" steer you away from the clear choice. Be sure to designate an alternative guardian in case the person you named is unavailable.

If you and your spouse disagree, it's time to seek guidance and counseling. This is far too important a decision to set aside until you can come up with a suitable agreement. 

Your estate planning lawyer in Orange County can help you work through these difficult decisions and ensure your estate plan lists the appropriate preferences and instructions, as well as clarifying financial support for guardian and children.

Joint Representation Versus Individual Representation

Joint representation makes sense for many couples. For those that agree on the most important decisions, have an open and honest relationship, and solid communication skills, working together with one lawyer saves time and presents a cost-effective strategy. 

For those couples that may have disagreements, individual representation may be the answer. This approach maintains the attorney-client privilege and allows each party to share concerns as well as information that they may want to remain confidential. By consulting with an estate planning attorney in Orange County, you're able to discuss your concerns and put an estate plan in place that will be a comfort to your surviving family members.

Maria Parker assists her clients plan for their end of life health care wishes and the ultimate distribution of their wealth after death. She personally experienced the importance of planning at the time her father passed away.

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