In many families, everyone gets along, happily gathering for the holidays, sharing laughs, telling stories, and enjoying each other’s company. Then, the matriarch or patriarch dies. Suddenly, years of pent-up resentment and hurt feelings surface, and the once-happy family is now embroiled in litigation over the head of the family’s money and property.
That’ll never happen to your family? We certainly hope not. But it is, sadly, a story we have heard more than once. That’s why it’s so important to plan for continued peace and happiness. Here’s how:
Having an Estate Plan Is Crucial to Your Family’s Success
When everyone is alive and happy, it is easy to think that nothing will break a family apart. Many people think that since everyone gets along, estate planning is unnecessary because everyone will look out for one another and do only what is fair. However, failing to plan not only takes the control out of your hands but can also leave hurt feelings and possible confusion over your true wishes. This confusion may force family members to pursue the only source available to resolve the misunderstanding: the probate court.
Not Just Any Estate Plan Will Do
While a lack of planning can lead to disastrous consequences, poor planning can be just as harmful. Documents that are outdated, vague, or improperly prepared can lead family members to challenge them. Family members may have differing opinions about your intentions if your documents are unclear. This is especially unfortunate if you have a trust, given that a primary reason for preparing a trust is to avoid court involvement. A trust contest, however, places your loved ones and the provisions in your trust under court scrutiny.
You May Be Able to Use a No-Contest Clause
If your documents are up-to-date and clearly state your intentions, but you worry that your decisions may displease your family, in some states – like Minnesota and Wisconsin – you can include a no-contest clause that could help prevent or limit beneficiary challenges to your will or trust. A no-contest clause is a provision that states that if a beneficiary contests your will or trust (whichever document contains the clause) and is unsuccessful, they will receive nothing. However, the effectiveness of no-contest clauses can vary, and they only affect the outcome of the dispute; they don’t preclude the dispute altogether.
But what if someone feels they have nothing to lose by contesting the will, namely, because you intentionally omitted them? If you want to disinherit a family member, consider leaving them a nominal amount at your death, so there is something at stake if their contest is unsuccessful. However, be sure to work with an experienced estate planning attorney to ensure that this strategy is best for you based on your state’s law and your family’s situation.
You Can Protect an Inheritance with Proper Planning
If you are concerned about a beneficiary receiving money outright, then losing it to creditors, casinos, and/or their own poor spending habits, consider using a discretionary trust where you set aside money in trust for the individual, directing the trustee to make decisions about when and how the money should be appropriately distributed.
Alternatively, if you do not want to put such tight restrictions on a beneficiary’s inheritance but still want a level of protection, you can have a beneficiary’s inheritance held in a trust and distributed to them at specific ages or when they reach certain milestones, like graduating college, getting married, or buying a house.
A Proper Estate Plan Can Help Avoid Contests
Having a well-drafted, up-to-date estate plan is crucial regardless of your family situation. Will or trust disputes can be costly and quickly drain what you want to leave behind for your loved ones. We can assist you in creating an estate plan that will ensure that your wishes are carried out and that harmony can be maintained within your family after you are gone. Call Sjoberg & Tebelius, P.A., today at 651-738-3433 to schedule an appointment.