Will my beneficiaries argue when I am gone?

How can I tell if my beneficiaries will argue about my estate when I am gone?

Greg Dickson, CEO and Accredited Specialist in Family/De Facto Law at WMD Law, recently wrote the following article detailing the most common factors he has identified as likely to give rise to a dispute between beneficiaries of an estate.

Disappointment

Machiavelli said “A son can bear with equanimity the loss of his father, but the loss of his inheritance may drive him to despair” – he was pretty right.  If a parent has told one or more of his or her children certain things about how the estate is going to be divided, and the will after that parent’s death does not reflect that understanding, then there will be surprise and disappointment for some members of the family. That surprise and disappointment is a key factor in fuelling disputes.

Something you can do to prevent that is to make sure your estate planning arrangements are kept up to date and properly reflect the promises or statements you have made to family members about what is to happen when you are no longer here.

The lack of a relationship between the beneficiaries

In many cases the beneficiaries don’t have a good relationship or any relationship during the life of the parent.  The parent has been the glue that has held the family together. Once the parent is gone, that glue is dissolved, and the parties are free to express their dislike of each other by disputing the estate arrangements. There is very little you can do to overcome this problem other than to properly communicate your wishes during your lifetime – a subject we will deal with below.

[Lorica Partners note – in our experience, it can often be the spouse of a child who urges your child to dispute an estate by claiming they have been treated unfairly.  It places your child in a difficult situation – do they argue with their spouse or with their siblings?]

Greed

Sometimes, where one child has been appointed as executor, greed will motivate them to extract the largest benefit they can for themselves, even if the will provides for equal division among the children.  One way this is done is by applying for executor’s commission out of the estate which is paid before division of the balance among the beneficiaries.

There are instances where the payment of a commission to an executor is justified to compensate them for unusual difficulties encountered in the estate and the extra efforts the executor has had to make to administer the estate, but there are many instances in which executors have sought this “extra” payment to the disadvantage of other beneficiaries.

Another way this occurs is when an executor has received gifts during the life of the parent or loans during the life of the parent that aren’t properly acknowledged in dividing the estate. Again, this is a major driver of discontent and dispute. To overcome it you should regularly review your estate planning arrangements to make sure an equal division (if that is your intent) is really what is going to be achieved having regard to benefits you have given to one or more of your children during your lifetime.

Vague, incomplete or outdated documents

This is another major cause of dispute. Contrary to popular belief, it is often better not to be too specific in arrangements contained in your will. Provided that your will is up to date, a simple requirement for equal division between beneficiaries is easy to understand and difficult to argue. On the other hand, complex arrangements governing the specific transmission of certain property or attaching conditions to the bequests can often give rise to uncertainty and dispute. Trying to rule the family from the grave is always a bad idea.

Not following the rules

Another major indicator of dispute in the estate is where one or more of the beneficiaries doesn’t follow the rules about how the estate ought to be dealt with. All too often we see family members taking it upon themselves to physically remove assets from the deceased’s property soon after death. Even where these items of property have little commercial value, it inevitably gives rise to resentment in the other family members and lingering distrust.  Another example is accessing bank accounts soon after the death of a parent. Both of these fuel disputes.  The best way to avoid this is to communicate as outlined in the last factor below.

Lack of communication

If there is a single factor which serves as an indicator of likely dispute it is this. There are two aspects to this lack of communication. The first is a lack of communication by the testator during their lifetime to his or her family about how things are to be after their passing. If the family is aware of the estate arrangements, surprises and disappointments are likely to be minimised. Similarly, if the parent makes it clear that there is to be no dealing with any asset until the estate has been properly administered, it is likely to prevent beneficiaries from helping themselves.

Getting the family to acknowledge and accept these arrangements also serves to minimise the likelihood they would later dispute the agreed arrangements – it will certainly make it more difficult for them to do so.

The second aspect is communication after the death of the testator.  The reading of the will was an old custom whereby the family was gathered together, usually at the lawyer’s office, to hear the terms of the will and to understand how the estate would be administered. That practice has fallen out of favour for a number of reasons but in some circumstances, it should be employed even if not in the rather formal fashion that was formerly the norm.

If the family can be brought together and made aware of the nature and value of all the known assets of the estate, how those assets are to be divided under the will and the process by which that is to occur, then the likelihood of dispute arising will be minimised. A lack of information often leads to suspicion about how the executor is conducting the estate. Those suspicions are key drivers of dispute.

Communicating with your family where possible as to your estate intentions is a useful tool to minimise the likelihood of disputes after your passing. Making sure your estate planning documents properly reflect the arrangements that have existed during your life is also very important and regularly reviewing those arrangements to ensure sure they align with what you have caused your family to expect is crucial.

WMD Law have made available a free Estate Planning eGuide .

Lorica Partners republished Greg Dickson’s original article with his permission.