Anyone with a brother or sister can tell you that sometimes siblings get along great and sometimes they fight. The question of how much they do of each varies, but some level of conflict between siblings is universal. Nothing seems to bring it out more than when parents die and brothers and sisters are left to divide up the assets. These fights over inheritance can be minimized beforehand with some careful planning by the parents, and afterward by beneficiaries by taking certain steps. This article gives an overview of what can be done at each stage to mitigate the almost inevitable conflict between siblings over an inheritance.
What Parents Can Do
The best way to avoid conflicts among your heirs after your death is to have a will—one that clearly articulates your wishes. Who gets what, etc. Spell out as much as possible, starting with the most valuable and working your way down. If there is a house you will leave behind you can specify in the will that the house should be sold and the proceeds divided evenly between siblings. You could also consider creating a Trust which can specify property dispositions after death. Trusts are a little more complicated and expensive to set up but offer the advantage of avoiding probate court after death. Go here for more on the differences between wills and trusts.
If you know you are going to leave property to an individual child you can also put the property jointly in your and your child’s name so that the asset passes automatically when you pass. This can also be done, for bank accounts, brokerage accounts, and other real estate.
What Heirs Can Do
After the parents pass, and despite their best planning there is still conflict between the siblings over inheritance, there are some steps they themselves can take to resolve it. Some options are:
Use a Mediator
It can be useful to have a third, independent party work with you to resolving the conflicts. Professional mediators are used to resolve all manner of conflict in every industry. Their help could be invaluable and well worth the investment.
Use an Independent Fiduciary
A fiduciary is a person or organization that acts on behalf of another person or persons, putting their clients’ interests ahead of their own, with a duty to preserve good faith and trust. You and your siblings would have to agree to forgo being an executor of the estate and jointly appoint a new person who will act as fiduciary—whether it’s another person in the family, an attorney, CPA, or a bank’s trust department. The fee for this service would be paid from the estate.
Liquidate Disputed Assets
If there simply can be no agreement over who gets a particular item, the final solution can be liquidation. Sell it and split the money evenly. This nuclear option can be used on a case-by-case basis or for the entire estate if need be.
Get The Money Faster
Many times, the source of the conflict hinges upon the fact that one of the siblings really needs their inheritance money as soon as possible. In other cases, the stress and long wait of the probate process add stress and frays nerves for everyone. If you find yourself in this situation, an inheritance advance could be a good option. With an inheritance advance you receive some or most of your inheritance in just a few days, removing the stress of waiting and allowing those who are counting on inheritance money for pressing expenses to put their inheritance to work immediately. See here for more on how inheritance advances work.
Hopefully, your parents have thought through these issues and made clear plans for their estate. If not, you can apply the strategies outlined above to resolve disputes. Also, it’s never too early to think about your estate and the legacy you leave your children. A well-crafted plan today will make things easier for them tomorrow.
Thanks to Investopedia for information in this article.