Conflicts between family members actually lead the list of threats to inheritances. Wealthy families and business owners are advised to plan proactively to prevent estate battles.
If there’s an inheritance in your future, be aware that the relatives you love or loathe are the most likely reason that inheritance might be challenged, says a recent article from CNBC, “Say hello to the No. 1 threat to your $11 million inheritance.”
A TD Wealth survey found that 44% of attorneys, trust officers and accountants cited family conflicts as the biggest threat to estate planning. The company surveyed 109 estate planning professionals in January at the 52nd Annual Heckerling Institute on Estate Planning in Orlando, Florida.
Modern families create more estate planning complications, because there are more blended families, multiple ex-spouses, children from prior marriages, and situations where one spouse is significantly younger than the other.
There are several ideas you should consider to maintain the peace between family members, while making certain your loved ones receive what you intended. The only way to make sure your assets are divided the way you want, is to implement a comprehensive estate plan, which includes properly coordinating the beneficiary designations on investment and retirement accounts. Those who die intestate (without a will) leave everything up to a probate judge in their home state.
Business owners especially need to implement a comprehensive estate plan. It’s common for a married couple to operate a family business that comprises most of their wealth. In many cases, one of their adult children is actively involved in that business, but the others aren't. When this happens, business owners can buy life insurance to help make the other less-involved children whole, or they can allow them to inherit a non-managing interest in the company.
If you haven’t already done so, review your estate plan with your attorney. The Tax Cuts and Jobs Act increased the estate tax exemption to $11.2 million per person and some of the strategies in your plan may need to be updated. You should also review your plan if there have been any significant life events, like a birth, marriage, death, or divorce. Finally, have some extended conversations with your heirs, explaining what your estate plan entails and why. An ongoing discussion, while you are still alive and well, can prevent surprises when you pass away.
Reference: CNBC (April 11, 2018) “Say hello to the No. 1 threat to your $11 million inheritance”
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