For many who decide to create an estate plan, their objective is to avoid the heavy burden of estate taxes. To this end, they may create trusts for their assets or find ways to protect their business from the federal estate tax, which can be significant for those whose estates qualify. However, if you are concerned about factors that may siphon money from your heirs, you may want to consider your heirs themselves.
Over 40 percent of estate planning professionals reveal that the biggest drain on an estate is not taxes but conflicts among heirs. While some cite the changes in family dynamics over recent generations, others offer some sound advice for people like you who want every advantage for meeting your estate planning goals.
What are the main issues?
Families are no longer a simple unit of parents and children. More often, families stretch into stepchildren, ex-spouses and drastic age differences between partners. These are just a few of the complications you may face as you prepare your estate plan. Whether you are trying to protect the inheritance of your biological children or decide how to fairly divide your estate among your stepchildren or grandchildren, you may have to consider the unrealistic expectations of your heirs.
One of the most common issues arising during probate is the inflated perception heirs have of their inheritance. Your children may not have an accurate idea of your estate’s worth or your plans to donate a large portion to charity, for example. Whatever factor leaves your heirs with less than they expect, you can avoid disappointing them by taking these steps:
- Communicate with your family about your plans for your estate, including how you will divide assets and the terms of any trusts you include in your plan.
- Discuss the value of your estate so your children understand what to expect.
- Keep your estate plan updated so there is no confusion if your beneficiaries seem illogical.
- Review your plan whenever tax laws change or if you should move out of Arizona since each state has its own estate planning laws.
- Create a succession plan for your business, and share the plan with your family.
Frequent and frank communication with your family seems to be the answer to minimizing the conflicts that may arise after your passing. Even if your family already has some existing conflict, your explanation of your estate plan can prevent claims that someone coerced you or that you created your plan when you did not have testamentary capacity. An attorney can help you meet your goals and address any questions you may have about your estate planning options.