Lack Of Estate Planning Leads To Family Feuds, Study Shows
Written by Gregg Greenberg
Featuring Asher Rubinstein, Partner, Gallet Dreyer & Berkey, LLP
Without proper estate planning, 58% of respondents have experienced family disputes and had assets fall under court control.
Where there is a will — of the legal variety — there is a way to avoid family infighting.
According to a study released Tuesday by LegalShield, 90% of Americans say having a will is important, yet less than half actually possess one. The survey goes on to reveal that without proper estate planning, 58% of respondents have experienced family disputes and had assets fall under court control.
Laurie Humphrey, a financial advisor at Granite Financial, part of Osaic, says the most common reasons for clients not having completed legal documents are a lack of urgency and not knowing who to name as guardian for minor children.
“As financial advisors, we should be holistic in looking at their entire financial picture,” Humphrey said. “Often, that might mean helping to coordinate with local attorneys to assist in getting the appointment with the client on the calendar. Because not everyone has a financial advisor, another option for solving this lack of planning might be encouraging employers to add it to the repertoire of employee benefit offerings.”
Attorney Asher Rubinstein, partner at Gallet Dreyer & Berkey, cites the additional reason that people are reluctant to confront their own mortality.
“The subject of one’s own death makes people nervous or uncomfortable and causes people to delay dealing with one’s will and planning for one’s death,” said Rubinstein, adding that he encourages his clients to consider estate planning when they’re experiencing major life events like marriage, divorce, or the birth or adoption of a child.
Avoiding a Family Feud
As for the consequences of not creating a will, Humphrey said a lack of planning can lead to a family falling apart when the matriarch or patriarch passes away. In her experience, many people think their children will get along and can “handle it” when it comes to estate settlement.
Nevertheless, not having a clear estate plan in place leaves the surviving family open to disagreements and, potentially, courts determining the next step. In the end, it can be more expensive and draining for family members than completing an estate plan in advance.
“Everyone handles grief differently, more so when money is involved. Having a specific plan in place that is legally binding and determined in advance can help to facilitate the smooth transition of assets, helping to mitigate some of the emotion that occurs during that time,” Humphrey said.
Along those lines, Thomas Kopelman, head of community at Wealth.com, said that not having a will or plan ahead of time is dangerous because it leaves all the decision-making to the family members, which can, in turn, “get expensive and require a lot of time which ultimately leads to family issues happening.”
“It’s actually a gift in making things smoother,” said Kopelman. “Sometimes issues occur because people are upset about what they got, but there is not always a good way to make everything equal. Have these conversations before versus keeping your family in the dark.”
From a legal perspective, once the will is contested, the court steps in monitors the estate, and oversees who gets what. The family members fighting over the estate have to answer to the court, so they have to hire lawyers for what is generally a very, very slow process. As a result, the assets could be tied up for months or years as the legal battle continues to an eventual resolution, whether by a settlement between the parties or a judge deciding.
“The way around a court contest is a carefully drafted trust document that clearly specifies who gets what,” Rubinstein said. “A properly drafted trust should avoid probate court and give less of an opportunity for someone to contest an inheritance.”