Executive summary
- Large estates may be more prone to family disputes because of the considerable number of valuable assets and the number of interested parties hoping for a portion of the inheritance.
- Strategies that can be used to resolve inheritance disputes include clear communication, comprehensive estate planning, and mediation.
- It is important to exercise emotional intelligence, empathy, and compassion in inheritance disputes in order to seek an appropriate resolution and avoid exacerbating the conflict.
- A trust or probate litigation attorney can help you understand your dispute resolution options or even serve as a mediator in your conflict.
Introduction
Estates of high-net-worth individuals tend to be more prone to family inheritance disputes as family members seek a share of what could be a substantial inheritance. Unfortunately, the conflicting interests of multiple family members and beneficiaries hoping to secure a portion of the estate can cause tension. These can result in disputes that can potentially damage family relationships.
Estate administration is the process by which assets are distributed by the personal representative of an estate to its heirs and/or beneficiaries. During the estate administration process, estate disputes and contests may arise where beneficiaries and heirs, such as siblings or spouses, challenge either the estate planning document itself, the way the estate is being administered, or they may claim a portion of the estate rightfully belongs to them either because it’s rightfully owned by the challenger (as seen in a petition like a Heggstad Petition or a Complaint to Quiet Title) or because of services provided by the challenger (such as a creditor’s claim). Often claims regarding the estate plan arise because an heir, beneficiary, or person who expected to be a beneficiary, learns they are receiving less than they believed or, in some cases, nothing at all. When the administration of the estate is challenged it is often because the heirs or beneficiaries learn that there are fewer assets than originally believed, or they do not like the way the personal representative is managing the assets.
In order to minimize disputes, it’s important that interested parties in an estate take certain legal and procedural strategies while maintaining a degree of emotional intelligence in order to navigate disputes with conscientiousness and maturity. A trust or probate litigation attorney can often help navigate or mediate any serious conflicts to prevent them from getting out of hand.
Understanding family disputes over high-net-worth estates
Disputes can arise during the administration of the trust or will of any estate, regardless of its size or value. However, family disputes in large, high-value estates tend to be more common due to the number and value of potentially inheritable assets and the number of beneficiaries in line to receive a share.
Inheritance disputes are common between siblings who are in line to receive an inheritance from a deceased parent, as well as between present or former spouses and other heirs. Disputes can arise for a variety of reasons, including greed, emotional attachment to property, or simply a justified (or unjustified) belief in one’s entitlement to an inheritance.
Some of the most common causes of family disputes include:
- Differences in communication of the estate plan versus what’s actually in the estate plan
- Unequal distributions between beneficiaries without an explanation
- Belief that caring for the Decedent in life entitles a person to more than their share in the trust
- Longstanding sibling rivalry
- Disagreements about funeral arrangements that boil over into distribution
Often, these disputes can be resolved through mediation or negotiation. Sometimes, a court may need to step in to resolve the conflict using evidence from the legal document outlining the estate plan or by referencing state intestacy laws regarding who is in line to receive an inheritance.
Some disputes may be more substantial, like those surrounding concerns over the validity of a will or trust if there has been a suspected case of fraud or undue influence. In cases of will contests or living trust disputes, the need for court involvement may be more likely as interested parties will need to present evidence for their claims to be reviewed by the court.
How to avoid family disputes
Although family trust or will disputes are a challenging possibility in any case, there are safeguards and steps that the grantor or an executor of a high-value estate can take to reduce the risks of them happening. The following strategies can play an important role in alleviating or avoiding family trust disputes.
Importance of clear communication
As with any type of dispute, communication can clear the air and alleviate some of the potential for disputes over large estate inheritances. Inheritance disputes are less likely when family members understand the grantor or testator’s wishes and know what they should expect from their inheritance. One of the best ways to avoid conflict is to start with a family meeting. In that meeting, encourage open discussion about financial topics, which are often taboo to discuss. This will allow any potential disagreements, concerns, or confusion to come up early and avoid litigation later.
The following steps can open up communication:
- Have open discussions – Open discussions between family members about their estate plans can prevent confusion or preconceived notions leading into the estate administration process.
- Establish clear communication channels – Establishing channels of communication between the personal representative of the estate and the beneficiaries will provide a clearer picture surrounding distribution timelines and amounts.
- Set expectations – The grantor or testator of the estate should set expectations around who may receive an inheritance and what it may include in order to prevent false hopes or expectations that lead to disputes.
Creating a comprehensive estate plan
A comprehensive estate plan is the most valuable tool that can be used to minimize the risk of disputes, as the deceased’s wishes are paramount in the trust or estate administration process. A comprehensive, clearly worded estate plan can avoid confusion as to distribution or disagreements on how assets should be divided. Estate plans leaving too much in the discretion of the personal representative may run the risk of disagreements regarding the administration itself about whether the division of assets has been fair, equal, and impartial.
An estate plan may include writing a will to identify beneficiaries and inheritance amounts or establishing a living trust to transfer ownership of assets into before eventually being transferred to beneficiaries named in a trust instrument. A clear and valid will or trust instrument that outlines the deceased’s wishes leaves little opportunity for a dispute as to the exact division of assets. Even if disputes do arise, any interested parties, and ultimately the court, can point to the estate planning documents for the final say as to the division of assets, assuming they are not challenging the document itself.
A grantor or testator should consult an estate planning professional or financial advisor to learn more about their estate planning options and determine what makes the most sense for their estate plan.
Mediation and conflict resolution strategies
Mediation and conflict resolution strategies are often the ideal approach for resolving disputes with the least possible disruption to family dynamics or the estate administration process as a whole. In a dispute, avoiding litigation is always the best-case scenario to preserve family relationships, estate funds, and funds of each person involved (either willingly or unwillingly) in an estate dispute. Litigation through the probate court can be costly and time-consuming, and only lead to more tension between family members involved.
Holding a family meeting may offer a chance to find an acceptable resolution to the conflict—include the parties involved in the dispute as well as a third-party mediator who can guide the discussion. Preface all discussions by establishing ground rules and operating procedures between all parties. For example, you may specify that all parties should maintain respectful language or speak in turns to avoid people from talking over each other.
If you’re facing a family dispute, consider seeking the support of a professional mediator who can offer their experience to establish ground rules and create an environment where all sides are comfortable sharing their concerns. Be sure to maintain respect and understanding in all conflicts.
Addressing family inheritance problems early
A family meeting can help you address the potential issues before they become issues. In life is the only time a grantor or trustor will be able to address the issues directly, so having the communication openly and early can ensure that the grantor or trustor has the ability to speak for themselves. If the issue arises following the passing of a grantor or trustor, addressing it early prevents further damage to the estate, a greater likelihood of return of any mishandled assets, and may mean being able to settle the issue early, avoiding costly litigation. Addressing inheritance problems with urgency can prevent them from becoming more significant and dragging out the dispute. Keeping an eye out for problems and underlying tensions before they escalate may help you get in front of disputes and maintain a positive relationship between all parties interested in the estate.
Some red flags to look out for include:
- A beneficiary or personal representative is being excluded from information or the estate plan or is being treated unequally
- A personal representative is failing to inform individuals about the estate plan or important decisions within it.
- A beneficiary or heir hoarding assets that belong to the estate and haven’t yet been distributed.
- A beneficiary or heir harassing the estate personal representative with questions or concerns about distribution terms or timelines.
- A grantor or testator of an estate has an outdated will or trust instrument that doesn’t account for changes in family relationships.
- A beneficiary or heir seems to attempt to influence or manipulate the grantor or testator into adjusting their estate plan before their death.
If any of these red flags are apparent, it’s important to open up the lines of communication and address any questions or concerns. A grantor or testator should aim to address any concerns by creating their estate plan and updating it regularly while also using clear language to avoid ambiguity. If a grantor or testator has already passed, then beneficiaries and personal representatives can address these issues by facilitating open discussions about the terms laid out in the estate plan, exploring the option for a will contest, and considering mediation to clear the air about any misunderstandings.
Handling family disputes over property
In cases where property has been designated for specific beneficiaries in the estate planning process, family disputes may arise over property that has an important emotional significance or personal interest. For example, there may be a sibling dispute over how to distribute the inherited family home into equal shares or a disagreement between a decedent’s surviving spouse and their children.
Ultimately, in these scenarios, it is up to the executor of the estate to manage sibling inheritance disputes over property. They may be able to use multiple strategies to resolve a property dispute. For instance, if the heirs agree, one of the siblings can buy out the others to maintain ownership of the property. If the parties can’t come to an agreement on how to divide the property, the personal representative of the estate may sell the property and distribute the funds from the sale equally.
That said, if a decedent left a valid will that named a designated beneficiary to inherit their property, then there will be little room for a dispute.
Regardless, if disputes do arise, you should take the following steps:
- Stay calm and rational to avoid escalating the dispute.
- Discuss your situation with a trusted third party to offer an opportunity to express your thoughts in a safe environment.
- Consider the various outcomes you may find acceptable.
- Consider seeking the support of a professional mediator and hold a family meeting to discuss a compromise.
After a certain point, legal support may be necessary and helpful for overcoming the dispute. A trust or probate litigation lawyer will have an understanding of probate litigation laws and offer assistance in understanding spousal or sibling inheritance rights and options for resolving the dispute, either through negotiation or litigation.
The role of emotional intelligence in conflict avoidance
Estate administration is often occurring at a very difficult time for every party involved. Unless a professional fiduciary or other third party is involved, most everyone involved has recently lost a loved one, and adding money into an already emotionally charged situation may serve to escalate. Empathy and compassion in these difficult times are the strongest tools for avoiding further conflict. Emotional intelligence is an important, valuable, and necessary tool in avoiding or minimizing conflict during estate administration. If emotions are running high, this can exacerbate a dispute and make it much more difficult to obtain a resolution around strong tempers.
Being able to put your interests aside for a moment to hear out the other side can make it easier to collaborate, compromise, and find a resolution. Exercising empathy also plays an important part in understanding each family member’s perspective, especially when everyone in the family is dealing with a difficult time.
Some strategies to manage emotional responses include:
- Take time to cool off and process your emotions before responding to family members’ communications.
- Hold discussions with a third-party mediator so that both sides can be held accountable and have their thoughts heard.
- Aim to understand the other person’s perspective before rushing to judgments.
- Consider where you may be willing to compromise and how you both can seek a resolution that benefits both parties.
All together, it is important to approach any dispute with compassion and empathy. The support of an attorney can be a valuable resource in mediating disputes to preserve family dynamics or, if necessary, building a case to address the dispute.
Protect your family’s legacy
Family disputes can happen in any estate, but the high stakes of large estates can increase the risk further. From family disputes over property to inheritance disputes between siblings, there are many opportunities for disputes to arise. If you’re facing probate litigation, you should consult a probate litigation attorney for support in preserving the interests of your family’s estate.
At RMO Lawyers, we are well-versed in addressing and resolving family disputes surrounding estate plans. We’ve handled many cases involving high-net-worth and ultra-high-net-worth individuals. Given our experience, we understand the sensitive nature of these estates and the importance of navigating the complex family dynamics involved.
Schedule a consultation with our team at RMO to protect your family’s estate and interests.
Glossary
Grantor – A person who creates a trust to hold their assets in an estate plan.
Testator – An individual who creates a will to be followed upon their death, explaining their wishes for the distribution of their assets to the beneficiaries they identify in the document.
Trust – A trust is a legal agreement that grants a third party, or fiduciary, the authority to hold and manage assets for the beneficiaries of an estate.
Personal representative – An overarching term for a person who is responsible for administering an estate, encompassing the role of executors, administrators, and trustees.
Executor – An individual appointed by a probate court who is responsible for managing and administering an estate and is named as executor in the deceased’s will.