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The Importance of Family Dynamics in Estate Planning

When planning your trust, most people of course think about how they want their assets distributed, who will be their successor trustee, who will be the guardian of their minor children, and on what terms will their beneficiaries receive certain assets. What many people overlook is the family dynamics, ie. how will the decisions they have made in creating their estate plan affect their children and other family members? Will certain provisions in their trust cause discord leading to difficulties administering the trust and even litigation?

There are definite topics that seem to cause family disharmony. One is the choice of a successor trustee (the individual who will administer your trust after your death, pay the bills, and distribute the assets). Some clients name their oldest child. Others may make all 4 of their children co-trustees. Whatever you decide, it is important not to choice a trustee “because he or she is the oldest”, or “he knows more about finances” or “I will name them all so no one feels slighted”. You should consider the family dynamics of your family. Will naming them all make it difficult to make unanimous decisions? Sometimes clients will even choose a private professional fiduciary because they want to avoid the family conflict and sibling rivalry they fear may occur if they name a family member.

Another area that can be a big issue after death is the family home. You may want to leave the home to one child because they will not sell it. You may choose another child because they will sell it. When you make provisions in your trust for one child to buy out the others, you should be sure all the terms are spelled out so there is no dispute later. Whatever your choice, again think of the consequences. Disharmony among your children can result in arguments and litigation after your death which just increases the cost of trust administration.

Another potential problem area is where you have loaned one of your children money during your lifetime. Do you want those loan amounts to be deducted from that child’s share or the loan forgiven?

Lastly, believe it or not,it is often personal property that causes the most disagreement among family members. If you leave certain items of personal property to designated individuals, how will the other family members feel? If you have divided all the personal propery equally among all your children, what if they disagree?

So when you create your estate plan, think about how your family is going to react when the terms of your trust are implemented. This may require some thought on your part and an experienced estate planning lawyer to carry out your wishes in drafting the plan.

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