You know you need an estate plan. And it’s good practice to protect your legacy, your family and your wishes. Whether you create a will, a trust, appropriate beneficiary designations on accounts, or some combination of the foregoing and other available tools, putting a strategy together on paper is only the first step. You need to protect that estate plan to be sure it is implemented in the manner in which you intend.
Anecdotal evidence suggests that since the Great Recession of 2007-2008, contests, complications, and confusion in estate administration has become rampant. Whereas in the past, most decedents’ matters were handled simply, politely and with the right measure of decorum, now the common refrain is “what am I getting and how soon can I get it.” Moreover, that expression often morphs into “why is he/she getting so much; maybe I should be getting more!”
Even if you believe that your family gets along swimmingly and there is no reason to put protective measures in place, stories abound of close families disintegrating upon the death of the matriarch or patriarch. It behooves you to protect your assets! Here are three suggestions:
1. Consider protective language within your will or trust. You can have clauses drafted within these documents that provide forfeiture of a share if any beneficiary contests (and loses the contest) the plan or other elements of your estate administration. Depending upon the state in which you live, these provisions may be of questionable enforceability. Nonetheless, the mere inclusion of them and the threat of a loss of a bequest may discourage inappropriate contests.
2. If you want to exclude a beneficiary that would normally be included under typical family circumstances — one of your children for example — do not try the “Hollywood trick” of leaving that person $1. In most states, including someone as a beneficiary, even for a nominal sum, gives them rights to receive information, documentation, and requires your executor or trustee to obtain their signature on paperwork for estate administration and estate closing. A better practice is to either leave that person a significant sum with a clause similar to that mentioned in paragraph number 1 above, or, acknowledge the person and that you intentionally left them nothing in your document.
3. Don’t keep your intentions silent. Although awkward, if you are treating beneficiaries differently, or even excluding one or more relatives, make sure people in your circle of family and business acquaintances are aware of this fact. Everything from conversations with family, to discussions with your attorney, to notes taken by witnesses or notary publics who are present when you execute your documents may be useful as further evidence of your intent, should a contest erupt.
Of course you should have an estate plan — only 30% of Americans do — and that’s an important first step in making sure your family and legacy are protected. But be sure to take the second step and consult with your estate planning attorney about how to protect the implementation of what it is you have set forth in writing. Forethought may forestall problems.