The death of a parent is an emotionally charged time, and can make the division of mom or dad’s stuff a trying task if their wishes haven’t been clearly laid out and explained in advance.
During estate planning, parents with more than one child should think honestly about how well their children get along and explain decisions about the division of their assets to prevent disputes, experts say. And for siblings left to deal with their parents’ estate, experts say organization, transparency and communication are key to avoiding hefty legal fees.
With the “Great Wealth Transfer” under way, Chartered Professional Accountants estimates $1-trillion will be handed down by baby boomers and the Silent Generation between now and 2026. For Gen X and millennial heirs, learning how to deal with their parents’ estate smoothly could save money, time and tears.
Ideally, this planning begins while parents are still alive and can walk their children through the reasoning behind their wills or division of assets, said Arieh Bloom, a partner at the law firm Tupman & Bloom LLP.
“When people are surprised and they’re dealing with grief, it can be a very volatile combination,” Mr. Bloom said.
Parents need to think about how well their children get along and whether it’s wise to distribute executor responsibilities evenly, said Karon Bales, a partner at the law firm Bales Beall LLP who specializes in family law and trust and estates law.
For example, if a couple has two children, it’s best to either choose one to be executor or appoint a third person and include a majority clause in the will which allows executors to act by majority, Ms. Bales said. This way the siblings can avoid entering into stalemates which might land them before a judge.
Whoever is chosen as executor, they carry a number of responsibilities which can be key in mitigating disputes, Mr. Bloom said. The first is to be transparent with their siblings, or any other beneficiaries, about their role as executor and the work it entails.
“If the beneficiaries understood what was involved in that job and how it can be really thankless, that can help mitigate the hurt that one sibling may feel for not having been appointed as an executor,” he said.
The second is to be clear about any compensation they’re receiving for acting as executor, when it’s being collected and when beneficiaries can expect their distributions. And the third is to be organized, keep records and receipts, and seek help from an accountant if needed.
The fastest way an executor can instill confidence within their siblings is to be clear about how the process will unfold, Mr. Bloom said. “You get a letter from an accountant or lawyer saying, ‘Here’s a copy of the will. Here’s the statement of assets and liabilities as of the date of death of your parent. Here’s when we’re filing the tax returns.’”
If, despite these efforts, a dispute still crops up that an executor or their siblings are struggling to resolve internally, mediation is a good option, Ms. Bales said.
Going through mediation can be helpful because it’s less expensive than going to court, encourages open communication and allows for creative, compromising solutions, Ms. Bales said.
“Court proceedings are win-or-lose, but sometimes there’s a way to look at a problem and figure out a solution where everyone maybe doesn’t win altogether but they get more or less what they’re hoping for,” Ms. Bales said.
Still, some sibling disputes end up in litigation first, before then transitioning to mediation, said Justin de Vries, principal and lawyer with de Vries Litigation LLP.
“The high cost of litigation often has a sobering impact on people. They realize litigation is expensive, it’s fraught, it’s emotionally taxing,” he said. Whereas mediation allows parties to craft a settlement on their own terms, he added, and often appeals after spending some time in court.
No matter the situation, sibling-to-sibling communication is a door that needs to remain open if the goal is to avoid conflict upon a parent’s death, Ms. Bales said.
“Instead of running off and everybody lawyering up, if they spent some time talking about what their expectations are in dealing with the parents’ estate moving forward, that might help,” she said.
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