How Family Issues Can Affect Estate Planning
When considering estate planning, many people think of avoiding estate taxes — and other forms of taxation — as the main issue. According to a group of estate planning professionals, however, the main concern should be family fights.
At the 52nd Annual Heckerling Institute on Estate Planning in Orlando, Florida, the company TD Wealth hosted a survey of 109 estate accountants, attorneys, and trust officers. According to this group of estate experts, “family conflicts” pose the biggest threat to estate plans.
Estate Planning and Family Complications
Families are complicated. The old-fashioned nuclear family of two parents and two kids is no longer the norm. Multiple ex-spouses, children from previous marriages, blended families, and split custody between step-parents, adoptive parents, and biological parents can make the process of estate planning much more complicated.
Other mitigating factors might include family entrepreneurship. If one child has worked for the family business while others have not, it may alter the degree to which the business assets are divided.
Every state looks at estate plans differently. If a person dies without a Will in place, it is referred to as “dying intestate.” Intestate situations mean the state of residence decides how the assets are handled. As an example, if you die intestate in New York, your surviving spouse receives $50,000 plus half of the remaining estate balance, and whatever is left over goes to the child (if there is one), or is split equally among the children.
The laws regarding intestate succession vary wildly from state to state. This page links to individual states’ intestate laws.
Ohio has its own intestate laws including “Declaration of Validity of Will,” “Nuncupative Wills,” “Testamentary Additions to Trusts,” and “Human Bodies or Parts Thereof.” For more information on Ohio’s intestate concerns, you can look at the Title XXI probate law here.
Estate Plan Transparency With Your Immediate Family
One of the primary recommendations estate professionals make is that you share your estate plans with your spouse and children when you first set those plans into place. For them, having full knowledge of your intentions, and of the legal steps that will go into place once your Will or living trust goes into effect, may prevent potential misunderstandings and arguments.
For instance, explaining now that one child is receiving a smaller percentage because that child’s college was paid for, can prevent a disagreement later.
Another important component of estate planning is the use of trusts that pay out over time. For some adult children, this can be helpful. A 25-year-old may think he knows exactly what he should do with a considerable lump-sum distributions such as a one-time $200,000 check, but it may be better for him to receive as 7% annually over 15 years.
Of course, you want to let your estate care for your heirs and beneficiaries as effectively as possible. And only you ultimately know what is best for your investments, your assets, and most significantly, your relationships with your family members, and their relationships with each other. But an estate attorney can help ensure you understand how to set up your Will.
Divorce Can Affect Proper Estate Planning
Couples are getting divorced at later ages in recent years, too. As the Baby Boomer generation gets closer to retirement, we are observing divorce rates increasing amongst older couples. A Pew Research Center study found that, between 1990 and 2015, divorce rates among people aged 40-49 increased by 14% percent, while divorce rates among people aged 25-39 decreased by 21%.
Most surprising to many observers, though, was the spike in divorces among people older than 50. In just that 15-year period, the divorce rate doubled among people 50 and over. “Gray divorce,” as observed in data from the U.S. Census Bureau and the National Center for Health Statistics, hit twice as many people in that older age bracket that had been observed in previous decades.
Sadly, this increase is having an effect on older Americans’ estate plans as well. As few individuals remember to revise their Will and overall estate plan following significant life events.
For help in establishing or updating your estate plan to account for all family situations, search for a Will and estate lawyer near you. They will be happy answer any questions and make sure your plan can legally be executed in your state.