For a lot of people, estate planning is simply a matter of slicing up a pie. You decide who will have a seat at the dessert table and how large the respective slices will be for each individual. In a very basic sense, there is truth to this, but there is much more to take into consideration if you want to plan your estate effectively.
First, you have to recognize the fact that there are different types of “pies” as it were. The way that assets are distributed if you use a last will is different than the process if you decide to go with a revocable living trust, or another type of trust. You should certainly explore all the options so that you can make fully informed decisions.
Arranging for the asset transfers is a large part of the equation, but you should also consider the estate administration process that will unfold before the assets can be distributed to the heirs. Gaining an understanding of the different possibilities could definitely influence your perspective.
With the above in mind, we will look at the potential for inheritance disputes that can enter the picture after you are gone if some people are not going to be happy with the decisions that you have made.
When a last will is used as an asset transfer vehicle, the executor would be the estate administrator. This person or entity is not permitted to act in a vacuum. Under the laws of the state of Nevada, the probate court must provide supervision during the administration process.
The estate will remain open while it is being probated for the better part of a year. During this interim, anyone that feels as though there must be some problem with the decedent’s will can come forward and contest the validity of the will.
It is not easy to convince the court that something is amiss, but in some instances, compelling evidence is presented. The thing that is relatively simple is the ability to issue the challenge in the first place. This is one of the drawbacks of probate, but there are others.
If you use a living trust instead of a last will, there is no readily available window of opportunity for people that may want to issue challenges. This is something to think about if you do have concerns about how someone will react to your distribution decisions.
A disgruntled party could file a lawsuit under these circumstances, but it would be complicated and expensive. Plus, you can provide a powerful disincentive when you create the trust declaration. A no contest clause can be included, and this would trigger the total disinheritance of any beneficiary that sues to challenge the trust terms.
Most people keep their monetary affairs close to the vest throughout their lives, and they don’t have a conference call with everyone in the family every time they make a financial decision. This is understandable, and you can apply the same principle to your estate planning efforts.
The final decision is yours, but the dynamic is quite a bit different than it is during your life when you are handling your personal affairs. This financial matter involves everyone that would expect to receive an inheritance, so your choices are impacting them quite directly.
If you know that someone is going to be very displeased, you may want to have a conversation with this person in advance. Clearly, this is not always going to be the way to go, but it is something to seriously consider. While it is true that you will not be around to experience the blowback, other family members will be in the crosshairs.
In a perfect world, you would probably like your surviving family members to maintain good relationships with one another and provide support when they can. When someone feels slighted and isolated from the rest, there can be ongoing resentment that never goes away.
We are holding a number of Webinars in the near future, and you can learn a great deal if you attend the session that fits into your schedule. There is no charge at all, and you can see the dates and obtain registration information if you visit our Reno estate planning Webinar page.
