Avoiding family conflict is an important goal in estate planning. Sometimes this is difficult to do, perhaps nearly impossible in some families. But there are a number of steps you can take in your estate planning that will certainly reduce the likelihood of conflict popping up later.
Many of the strategies we will briefly look at here involve making your wishes known. It is important to communicate your plans to family, as many conflicts pop up as a result of having no direction and forcing family to make tough decisions in a stressful or sad time. Among the strategies to help reduce the possibility of conflict are establishing a will or living trust, filling out an advanced health care directive, appointing a power of attorney to manage your assets, and filling out a HIPPA release form.
Setting up a will or a trust is foundational to estate planning, for these are the vehicles by which you transfer your assets. A will indicates the how and who of transferring your assets at the time of your death. Many people choose to base their estate plan on a will, since they are usually rather inexpensive. The downside of a will-based plan is that it will require probate, the court-administered process by which the will is authenticated and the assets listed in the will are transferred.
Trusts are a preferred way to set up an estate plan for some, as they maintain confidentiality regarding the disposition of assets, have more speedy and flexible distribution, and are less likely to be contested than a will. There may also be tax savings for those with more wealth.
In our next post, we'll continue discussing trusts and other recommendations for avoiding family conflict.
Source: Forbes, "5 Key Estate Planning Documents To Help Avoid Family Conflicts," Michael Chamberlain, October 21, 2011.