No matter how well you think you know your loved ones, it’s impossible to predict exactly how they’ll behave when you die or if you become incapacitated. Of course, no one wants to believe their family would ever end up battling one another in court over inheritance issues or a loved one’s life-saving medical treatment, but the fact is, we see it all the time.
Family dynamics are extremely complicated and prone to conflict during even the best of times. And when tragedy strikes a key member of the household, even minor tensions and disagreements can explode into bitter conflict. When access to money is on the line, the potential for discord is exponentially increased.
The good news is you can significantly reduce the odds of such conflict through estate planning with the support of a lawyer who understands and can anticipate these family dynamics. This is why it’s so important to work with an experienced lawyer like us when creating your estate plan. Those generic, do-it-yourself planning documents found online can lead to disaster. Those fill-in-the-blank forms online are unable to anticipate and navigate complex emotional matters like this, but we can.
By becoming aware of some of the leading causes of such disputes, you’re in a better position to prevent those situations through effective planning. Though it’s impossible to predict what issues might arise around your plan, the following 2 things are among the most common catalysts for conflict.
Breach of Fiduciary Duty
What is a fiduciary? The person you pick to manage your affairs for you – your power of attorney, executor, trustee, and health care agent. Many estate planning disputes occur when a person you’ve chosen to handle your affairs following your death or incapacity fails to carry out his or her responsibilities properly.
The fiduciary, is legally required to execute their duties and act in your best interest and in the best interests of the beneficiaries named in your plan. The failure to do either of those things, is referred to as a breach of fiduciary duty.
A breach of fiduciary duty can be from the person’s deliberate action, or it could be something he does by mistake. Either way, a breach—or even the perception of one—can cause serious conflict among your loved ones. This is especially true if the fiduciary attempts to use the position for personal gain, or if the improper actions negatively impact the beneficiaries.
Common breaches include failing to provide required accounting and tax information to beneficiaries, improperly using estate or trust assets for the fiduciary’s personal benefit, making improper distributions, and failing to pay taxes, debts, and/or expenses owed by the estate or trust.
If a suspected breach occurs, beneficiaries can sue to have the fiduciary removed, recover any damages they incurred, and even recover punitive damages if the breach was committed out of malice or fraud.
You need to be extremely careful when selecting your fiduciaries. Ideally, make sure everyone in your family knows why you chose the people you did. You should only choose the most honest, trustworthy, and diligent individuals. You must also be careful not to select those who might have potential conflicts of interest with beneficiaries.
It is vital that your planning documents contain clear terms spelling out a fiduciary’s responsibilities and duties. It’s important that the fiduciary understands exactly what’s expected of him or her. Should things go awry, you can add terms to your plan that allow beneficiaries to remove and replace a fiduciary without going to court.
We can assist you with selecting the most qualified fiduciaries. We can also help you draft the most precise, explicit, and understandable terms in all of your planning documents. Additionally, we’ll help make sure your family understands your choices, so they do not end up in conflict when it’s too late. When you plan properly, the individuals you select to carry out your wishes will have the best chances of doing so successfully and with as little conflict as possible.
In our next blog, we’ll continue with part two in this series discussing common causes for dispute over estate planning.
This article is a service of Susan Hunt, Personal Family Lawyer®. We don’t just draft documents; we ensure you make informed and empowered decisions about life and death, for yourself and the people you love. That’s why we offer a Family Wealth Planning Session, ™ during which you will get more financially organized than you’ve ever been before, and make all the best choices for the people you love. You can begin by calling our office today to schedule a Family Wealth Planning Session and mention this article to find out how to get this $750 session at no charge.