70 percent of families lose their wealth to estate battles
What do oil tycoon, J. Howard Marshall II, real estate developer and hotel magnate Leona Helmsley, socialite and philanthropist Brooke Astor, the “Godfather of Soul,” James Brown and baseball great, Ted Williams have in common? Battles over their estates cost their heirs a fortune and in most cases, permanently ripped apart families.
It didn’t have to be that way. Careful planning, and open communication prior to the death of the principal can put a halt to the carnage, that’s why Rajiv Nagaich advocates family meetings for his clients as part of the planning process. Research from the Williams Group indicates that 70 percent of families lose their wealth to estate battles and not all of the battles are over money. Bernard Krooks, an estate lawyer with Littman Krooks in New York, says it isn’t unusual for people to lose more than they stand to gain by going into battle over inheritance issues.
One problem that comes up frequently is that people associate the value of something with its monetary value. Yet, it may be that a keepsake having little monetary value is the item the members of the entire family place the largest value on.
Some people leave a smaller value for a child they had previously helped along financially with the idea that they are balancing the books but if that hasn’t been relayed to the child, he or she is likely to experience hard feelings towards the other sibling or siblings.
So how do you keep everyone on an even keel?
- Communicate clearly with the heirs before your death. Be explicit in who gets what. Be thorough in making a list of your assets and note the beneficiaries for each. If you’re working with a lawyer
- Leave things of equal value to your heirs. Get input from the beneficiaries. Be prepared to explain your thought processes in determining inheritances.
- Stay consistent in your decision process.
- Consider giving away assets before you die.
- Carefully consider your executor. He or she can go a long way in keeping cool about inheritance disputes.
- Some Wills include clauses in the case of disputes but Krooks suggested that the best solution is to provide a reason for an individual not to dispute it by leaving something of value that would be lost with a dispute.
- Include reasons for the way things are being distributed as part of the Will.
For more about avoiding disputes, please read this Wall Street Journal article.