If a family member has passed away and his or her will or trust is in the midst of being settled, emotions and tensions within your clan may be high. Relatives are grieving, but at the same time, decisions regarding the fate of the estate must be made.
Siblings may squabble over their "fair share" of the estate, a surviving spouse may face resistance from the deceased's children from an earlier marriage, estranged family members may come out of the woodwork, and more. It may seem unlikely to maintain family harmony during such a challenging time.
Fortunately, a few key interpersonal tactics, as well as some practical solutions, can help keep arguments to a minimum, says Susan Lill, Senior Regional Fiduciary Manager with Wells Fargo Private Bank. "Managing conflict generally boils down to good communication among family members, and perhaps some smart mediation-type skills," she says.
Catherine Flynn McDermott, Senior Wealth Planning Strategist for Wells Fargo Private Bank, agrees. "Many misunderstandings happen simply because family members don't realize how long it takes to settle an estate, or feel they don't know what's going on," she says. "Communication with beneficiaries is key."
The following are a few of the most common estate-settlement conflicts and some potential solutions to bring harmony to all those involved.
1. Squabbling over personal items
"You'd be amazed at how often siblings are fine about splitting millions of dollars in stock shares, but practically get into fist fights about one family vase," says Lill. Because dividing personal property is often the most difficult part of settling an estate, The Private Bank has specialized tangible property experts. They can help families when the bank serves as executor, trustee, or agent for the executor.
Peacekeeping tactics: It may feel a bit extreme, but Lill suggests having the personal representative/trustee change the locks on family and vacation homes while the estate is being settled. "Tell family members you're just trying to make sure no one removes favorite items before anyone else, in an effort to avoid major arguments," she says.
Next, decide on a reasonable way for family members to split items not clearly delineated in the will or trust — from vehicles to pocketbooks, suggests Lill. One option: Have family members write down 10 items from the estate they would most like. If someone wants an item that no one else lists, it's theirs.
For overlapping items — and any other physical items left in the estate — consider taking a round-robin approach, allowing family members to take turns selecting items. Depending on the will/trust language, or the decision of the personal representative, McDermott says you could deduct the value of tangible items from each family members' share of the estate. That way, no one feels they've gotten less than "their share."
2. Impatient beneficiaries
Maybe you have a cousin who is tight on money and wants his inheritance well before the estate can be settled. Or perhaps two siblings inherit a vacation home; one wants to sell it immediately even if the market isn't great, while the other wants to wait and sell later at a potentially higher price.
Peacekeeping tactics: A modest "advance on an inheritance" or loan payout against an asset (like the shared vacation home) can calm antsy relatives. "Just be sure you leave enough in the estate account to pay taxes, medical bills, and other fees — and that you put the advance or loan in writing," says McDermott.
3. Unequal distribution of assets
One beneficiary might be left a smaller share of the estate for a variety of reasons. For instance, maybe one adult child is financially successful and the parents didn't think they needed as much help.
Peacekeeping tactics: "In some situations, it's helpful if benefactors talk to family members while they (benefactors) are still alive or leave a side letter with their will or trust that explains their reasons for treating beneficiaries unequally," says McDermott. If that wasn't done, consider bringing in a trust professional — either formally, as a co-fiduciary if the estate allows it, or informally, as a family advisor. This person may be able to objectively explain and help manage the disparity, rather than pitting family members against each other.
Overall, remember that settling a family estate can be emotionally challenging. A reasonable goal is to get through the process without unnecessarily damaging relationships — and without incurring a lot of expenses settling disagreements.
"Give family members a little extra grace and understanding during this process, since everyone grieves differently," Lill suggests. Also, when an estate settlement proves particularly challenging for a family, Lill suggests bringing in professionals to take on settlement tasks and help resolve disputes. "That can be a great way to preserve family harmony."