Working in a trustee company in the past, I saw what happens when estate planning is poorly thought through, executed or simply that there has been no communication between the parties. Too many families are torn apart by poor estate planning, but with a comprehensive estate planning approach, many problems can be dealt with well before trouble brews.
Equalling Up Provisions
For some families there is an equal situation, where the parents have helped one child more than another significantly they may wish to give more of their estate to the child that has not received significantly financial assistance. This should be communicated early, and if necessary with all the children in attendance, explaining the decision in manner that gives everyone an understand of what is occurring.
We were recently faced with a situation, where a parent decided to pay the school fees for his grandchildren, as one of his children has five children and the other none, this was a significant financial imposition to the potential estate. The matter was raised by the child with no children, that it was unfair to benefit one child over the other. The father had made a significant equally provision in the estate without communicating this to his children, a dispute created out of a lack of communication.
Gifts to Charity
The charitable sector have made significant inroads into becoming beneficiaries of estates, this is an area which can also cause significant distress and complexity in the distribution of estates. Whilst drafted for the best of intentions, allowing a charity to draft your will, especially if there are other beneficiaries can be a recipe for disaster. Often times it is more effective and easier to make a donation prior to death, rather than making provision via the estate, this allows for more control to be placed over any gift and can make the distribution process much easier.
If there are significant charitable bequests, again communication is the key, a lot of the cases on estate planning and family provisions are from where there have been significant legacies for charities and potential beneficiaries have missed out.
Excluding a child
One of the saddest estate planning issues is where a child has been excluded from the estate completely, especially where it comes as a shock to the child. Most successful family provision claims come from a situation where there has been a child excluded from the estate completely. If this is an approach which is going to be followed, then communication needs to be the key, whether in writing to the child or a family meeting when the estate plan is being prepared, there is a need to ensure that the child is aware of what is happening and why this is occurring.
The provision and protecting of disabled children is one which needs refinement and strong family communication, especially where a child needs high level care, or where the parents are the primary carers, are aging and that the existing care structures may no longer be appropriate.
There have been several cases where a will has been contested on the basis of insufficient benefits being paid to a healthy child, the argument that they suffered as a result of emphasis placed on a disabled child. There is an argument that this could have been resolved with communication within the family, explaining the cost and level of care which was required, and that the “disadvantaged” child was still the primary beneficiary of their sibling’s estate. In this example more than 40% of the estate was lost in costs, and the distribution was retained in the original form.
Undue influence and wills under duress
This is a major concern and within the profession, is something that is difficult to measure and even more difficult to protect against. Where a parent is of advanced age, or there is concern over competency, then there are additional steps which need to be taken, and it is generally suggested that a potential beneficiary recuse themselves from involvement in the process wherever possible, even where there is no advantage or significant change to the overall estate plan.
Estate planning is as much about the preparation of the documents as it is about the communication process, ensuring that communication is made with the potential beneficiaries and explaining the decision making process can save family disharmony and potentially legal fees.
Thinking of estate planning?
Give the Team at A.D.S. Law a call, 1300 ADS LAW