4 Tips for Writing a Will Your Heirs Won’t Fight Over

4 Tips for Writing a Will Your Heirs Won't Fight Over 956x538 blog


Summary

  1. Name the right executor
  2. Include personal property
  3. Don’t tie up the money for too long
  4. Explain any unequal bequests

[Edited transcript]

1. Name the right executor

Janice:             Now, typically, you would pick, they’re saying here that you could pick the oldest of the children maybe but that might not be the correct one that you would want to do the job.

Janice:             They said rather than considering the age or who they are, maybe think of the skills that are gonna be needed for the job. Talk to the attorney, let them know maybe a little bit about each person and who can handle it. So, they’re saying just pick the right one originally. How do you feel about that?

Anthony:            Yeah, absolutely. This is something that as I’ve gone through my career as a professional executor and probate attorney, I’ve come to realize how silly this custom is. Folks tend to treat naming their executor like naming their best man or maid of honor, like it’s a, “Who’s my favorite?” That’s not how you should approach it.

Janice:             Right.

Anthony:            It is not a designation of honor, it is a job and it’s a tough job actually. So, you go based on skillset and availability because, because it’s such a time-consuming role, if you name your son or daughter who has an infant and is also working a corporate career 7:00 to 7:00, there’s no way they can reasonably take on the additional obligations of being the executor as well. So, it’s a combination of do they have the time, do they have the life skills? If your eldest is still only 22, 23 years old and they’ve never even filed their own tax return yet this is going to be a lot, a learning curve being an executor.

Anthony:            So, a lot of people think it also boils down to trust. And sometimes using an objective professional can be a very good substitute for trust because professionals, in the leave of trust, they have liability-

Janice:             Right, right.

Anthony:            … and self-interest.

Janice:             And experience. Right.

Anthony:            If you have an attorney or a bank that knows that they’re on the hook for any wrongdoing, then they’re keenly aware of it because they operate in a court frequently, that might be more of a deterrent for wrongdoing than something squishier like trust. I hate to sound so simple about it, but …

Janice:             Right. No, absolutely. And it’s a long process.

Anthony:            Sure. And one also super-important point is that bias or even the appearance of bias between the heirs and the executor can cause huge problems.

Anthony:            And what I mean by that is, let’s say the executor is Uncle Bob and there’s five nieces and nephews who are the heirs, if Uncle Bob has a really tight relationship with one of the nieces, they talk on the phone, they have Sunday dinners, and he doesn’t have a bad relationship with the other nieces and nephews but he’s not as close with them, there’s gonna be this perception that she gets more information or that she’ll get slightly better treatment.

Anthony:            And even if Bob is literally stone-cold objective, just that appearance or that perception of bias can cause problems. And what I mean by cause problems is cause more lawyers to get brought in, more fees, more expenses, more problems.

Janice:             Absolutely. And you’ve talked about that before. It does happen. Would you say it happens often or just sometimes when you have the [crosstalk 00:04:05].

Anthony:            I’d say resentment or stiff feelings from these kinds of things happens often, the only question is to what degree will it manifest itself.

Janice:             Okay.

Anthony:            Will it just be snide comments on the side like, “Well, she always was the favorite?” or will it be full-on-

Janice:             Over Thanksgiving dinner.

Anthony:            … “Here, talk to this guy, he’s my attorney now.”

Janice:             Right, right. So, just a matter of trying to maybe nip it just a little bit so it doesn’t get bigger?

Anthony:            Or bring in a professional who is completely objective-

Janice:             Yes.

Anthony:            … and who is not a family member with no stake or relationships.

2. Include personal property

Janice:             So, some of the smallest things, they say a childhood toy, a holiday decoration, a piece of costume jewelry, can trigger the biggest family fights. So, they recommend that they … This is where I’m gonna need your help a little bit. So, they make a list of who should get what. And I was reading this to say a specific, like an heirloom ring that came from great grandma, now you have it, and what’s it worth? How do you do that? Do you keep a list? Do you put it inside of the will? What’s the best way for people to give a specific piece a tangible property?

Anthony:            My experience is a little different, and again we’ve done hundreds of estates so this is based on that sample size. It has not been my experience that folks fight over sentimental items as much as … Just not that often. Certainly not worth drafting a will in a very certain way and potentially causing even greater problems.

Anthony:            So, here’s what I mean by that. The concern here, the risk that we’re talking about is, “Oh, if the will says my executor will just divide up all my personal property evenly amongst my heirs, what if my daughter wanted the ring but the son gets it?” That’s gonna cause a problem. If it’s monetarily roughly equivalent, if everything is appraised, if the jewelry is appraised and the car and the, I don’t know what else, antique furniture is appraised, the heirs tend to work those things out. It’s very infrequent that as long as they’re getting roughly the same dollar value family members will fight tooth and nail over who gets the china. It just doesn’t happen that often. I’m sure, yes it does happen, but it’s just not something that I would consider worth spending a lot of time planning for.

Janice:             So, would you just maybe put a note somewhere in case you didn’t … I’m really feeling with this article that communication is the key. So, they talk a lot about, “Talk to them and tell them or communicate with them and let them know what you’re thinking ahead of time.” Not anything like a big presentation or anything, just a quick like, “Hey, I’d like so and so to have … ” or, “So and so to have … ” But would you recommend a post-it note on somewhere or anything like that?

Anthony:            If you like. But here’s the thing, Janice, I don’t know when I’m gonna die and most people don’t. I’m sure there-

Janice:             No, no, they don’t.

Anthony:            … are situations where folks are terminal, but in most cases you have no idea if it’ll be next year or 20 years from now and your stuff will be a lot different then.

Janice:             Very true, very true. You may not even have that particular item at that point.

Anthony:            Exactly.

3. Don’t tie up the money for too long

Janice:             So, they’re talking about making sure people are adequately provided for, but they’re talking about timelines. So, for example, sometimes trusts are created to allow the children to inherit after the surviving spouse passes, but if the surviving spouse is almost the same age as the children, maybe from a first marriage, that could be a long, resentment-filled wait. So, planning for that maybe thinking of the ages.

Janice:             But then it talks about, which I think you and I might disagree with, the way they’re saying it here is that in a trust they leave money to children at certain ages, which we’ve talked about, where you don’t give it all at one time, when they turn 18 here’s a million dollars. They set it out for maybe 21, 25, the rest at 30. But what they’re saying is that some people use these provisions to drag it out over decades to restrict. But I think we disagree with this because we feel that those timelines are in place probably to protect the assets and not have them all spent at once. What do you think?

Anthony:            Okay, so there’s two examples we’re talking about here. The bottom is this is almost exclusively about trusts. If you’ve set up a trust in your will, how long is too long to stretch it out to give it to your heirs before it becomes a source of resentment? That seems to be the point here. And in the first example you give, yeah, that’s probably some bad planning. If you’re second wife, I guess second wife, or if your-

Janice:             Yeah.

Anthony:            … spouse at the time of your death is roughly the same age as your adult kids, and I think an example, everything goes to the surviving spouse and the kids only get it after the second spouse passes away, that basically means your kids don’t get anything.

Janice:             Yeah.

Anthony:            So, yeah, that’s just kind of bad planning. I think that would either have to either be done very intentionally so I guess you wouldn’t really care what your kids think or-

Janice:             Right?

Anthony:            … or by bad planning. So, just make sure you get a good attorney.

Janice:             Right, bad planning.

Anthony:            Yeah. The second example is more common and I kind of disagree with the conclusion on it. So, here’s the second example. “Very common in your will is that if you have minor kids, you don’t wanna give it all to … If both parents die, you don’t wanna give everything to your kids the moment they turn 18 which is technically when they become adults.” Just imagine, like you said Janice, an 18-year-old receiving $100,000, $300,000, a million dollars, from life insurance, whatever. And I’ve seen this happen. I’ll tell that whole story another time, but it does not end well. I’ve seen it happen several times.

Janice:             No, no.

Anthony:            So, what’s the mechanism that most attorneys use to prevent that? You do these trusts that pays out in structured periods. And the example they gave is kind of a typical example, one third of their inheritance at the age of 21, the second third at age 25 and the balance at age 30. It can be different ages but that’s a pretty common set of ages.

Anthony:            However, the conclusion here in this article is that kids might get resentful that their money is held for that stretched out period. I mean, I guess my answer to that is too bad.

Janice:             Yeah, tough.

Anthony:            A 25-year-old says, “I want my money now,” is kind of proof that it was a good idea to keep the money back in trust.

Janice:             You don’t need that money, wait. Right. And you are I well over 30-ish, and looking back I would prefer, if it was set up like that, if you gave me all that money at 18 and it was gone, now as a not-30-year-old I’d go, “What was I thinking? I could use that now for kids are going to college and there’s so much stuff.” So, okay, it might be a little bit resentful at the age of 30 but they’re gonna figure it out when they’re older and go, “Oh look, I have this now. I can use it for something purposeful.” I think it’s great planning. It might make you a little bit upset but, hey, when you’re over that 30 mark you’re gonna realize, “Wow, I’m really glad they did that.”

Anthony:            Janice, do you like my summary of my advice, that it’s too bad?

Janice:             I did actually, because that’s what I would tell my younger self ’cause I … I don’t know about you when you were 18, what happens, if you got $100,000 that’d just go-

Anthony:            Oh my goodness.

Janice:             Right? I know I wouldn’t have any of that money left at all right now to look at, so yeah tough.

Anthony:            We’re not even talking about just doing crazy things like buying a car or this or not.

Janice:             No.

Anthony:            When you’re 18 or even 25, you don’t know anything. There are financial products salespeople-

Janice:             I got it-

Anthony:            … out there who will prey on you.

Janice:             Yes, yes. You’re not going to know, some, maybe there’s a handful that do, but you’re not gonna know how to invest it, how to use it properly. It’s just the reality of you don’t know that stuff yet, you’ll learn it but you don’t know it.

4. Explain any unequal bequests

Janice:             So, parents usually think that they have good reason for leaving one child than the other. Maybe one’s more successful, maybe one’s not as financially able to take care of … Could be an entire, whole range of reasons of why one would get more than the other and that’s gonna feel unfair to those left behind that don’t get as much. So, the suggestion here is to schedule a family meeting and explain it.

Janice:             We’ve talked about this a couple of times now; communication. If you’re going to do something one way, talk about it. Again, no big, huge presentation, just sit down, have a conversation and say this is why. That’s going to leave the others feeling a little bit better than they would not having any idea and finding out in the will, “Wow, child number two, he got 50%. We’re left with just what’s left over.” You definitely wanna sit down and talk to them about that. And you better have a good reason ’cause it is gonna cause animosity even if you really explain it.

Anthony:            I think the way you put it Janice is best, that just explaining it in and of itself has value. Kind of feel like no matter what, if someone … How do I put this nicely? There are many situations where folks will, well, heirs will feel sighted no matter what. But at least if they have an explanation they have that to hold onto.

Anthony:            I’d like to give a few examples that would illustrate why this advice might be necessary. So, the first example we see often is unequal assistance during lifetime. So, if you have two kids but you helped your first kid buy a house while they were living, that would sort of explain why in your will your second kid gets a bigger share, yeah?

Janice:             That makes sense, yes.

Anthony:            Right? Then there’s a second example of sort of differences in needs or personalities. The obvious one is if you have one child who is special needs or disabled. I think most people would not have a problem with that problem getting more. I mean, who knows, it might-

Janice:             Absolutely, absolutely.

Anthony:            Right? But it might not be as overt as that. It might be that one child is just financially irresponsible and has gambled away his life, right? Now, that might not seem fair, that might seem very prodigal son-ish, for the matter child to get less just because the first child was irresponsible but sometimes that’s just how it is. Again, so it still might not feel fair, but having that family conversation can at least explain it. Yeah?

Janice:             Yes. Just communication, explaining beforehand, I think that’s what it boils down to.

Anthony:            Yeah. And there’s one final common example, and that’s where end of life care. So, if mom is sort of, has declining health in the last few years of her life and eldest daughter is the one who sort of put her career on hold or even quit her job-

Janice:             Oh right.

Anthony:            … had their mom live with them. There’s gonna be some potential financial adjustments in the will to sort of compensate for that. I don’t love using the will as compensation for services, but it does happen. And as long as everyone understands that’s what’s happening, again, might not agree with it but at least they’ll have that understanding.

Janice:             Exactly. And like you have mentioned, set it up correctly the first time, have a good planner, have somebody that’s gonna guide you through setting this up, and then talk to the kids, talk to the heirs. Have it all out there on the table so it’s not a surprise.

Links

https://www.dallasnews.com/business/personal-finance/2018/09/25/4-tips-writing-will-heirs-wont-fight

Original post by Liz Weston (@lizweston or LinkedIn) from @NerdWallet

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