In the "good old days" (which often weren't so good), most of us died relatively poor, and there wasn't a whole lot left to divvy up among those who survived us. With recent significant increases in home ownership equity, if you die owning a mortgage-free house you now often die rich. Plus there may be life insurance and investments to distribute. This is all great for one's survivors, but not so great if family relationships are already a little strained at the time of your passing.
In the old days, even if beneficiaries of estates were inclined to squabble over who got what, they did not often retain legal counsel since the legal fees would outweigh the money in dispute. But now "lawyering up" prior to estate distribution is becoming much more common.
In my estate litigation practice, I consistently find the disputes far nastier and more intractable than the conflicts in my family law practice.
Here I offer you five things to never do if you want to avoid family feuds over your estate.
1. Have No Will or a Very Outdated Will
It continues to amaze me how many smart, hard working people - including even lawyers I know - have no wills! Or they last updated their wills 40 years ago when they had far fewer assets, and their family members were far less numerous. It's got me thinking about what an unpleasant thought mortality is for many of us.
The default operation of the law is a very poor guide as to where your estate should go, and for who should be appointed to administer it. Wills are quick and relatively inexpensive to have professionally prepared, and a carefully drafted will minimizes later family beneficiary conflict - you need one.
2. Appoint Several Simultaneously Acting Executors
Picking the right executor for your will may be more important than picking the right beneficiaries. People often spend months debating who should or should not receive that prized china tea cup in a will, but take about five minutes (literally) to determine who should act as executor and estate trustee in a very onerous and complex role.
Your executor is THE key player who will determine whether your estate is distributed hassle free, or with acrimony and litigation lawyer involvement. While many think that appointing several people to simultaneously act as executor will permit spitting the workload and ensure all those important to them have the “honour" of being executor, the reality is that being executor is a thankless job where nothing may get done if it proceeds by committee.
Picking someone (and only one person) who is relatively impartial (and ideally not a major beneficiary, but who is compensated for his or her effort), has some financial abilities, and has people skills, is the usually the best strategy.
3. Appoint No Alternate Executors
No where else in the legal world do we draft binding documents that only take effect many decades in the future, when factual realities may have changed dramatically. Thus planning for changing contingencies means having one or more backup executors. The person you name today might be dead, or incapacitated, or unable to be located, or just plain not willing to act 30 years from now. So you need a backup. And all executors you name should preferably be younger than you are to hedge your bets that you won’t run our of executors.
4. Distribute your Actual Assets Rather than Shares
As much as you might want to leave your house to one person, and everything else to another person, be aware that the legal result of you not having that house 20 years down the road when you die will be that the person who was supposed to get the house will receive nothing, and the person who you intended to receive everything else will receive 100% of your estate, including possibly all of the proceeds of sale of your house if you invested the money!
So try not to give “specific bequests” in your will of anything more than nominal value, just use “shares” where you split up your estate into slices of the same pie. Some can receive a bigger slice than others, but this way everyone gets dessert.
5. Completely Exclude Anyone who is Deserving from your Will
The more people you "cut out" of your will who might usually be expecting a gift, the more you heighten the chances of one of them challenging the will. You definitely don't need to treat everyone equally (at least under Canadian common law in Ontario), but if you have three children, and you give two of them $100,000 each, and the third one nothing, you are asking for trouble. Even if you have good reasons for doing so.
If you are planning to cut someone out totally, don’t leave them the insulting $1 of times gone by, just explain briefly why you are doing it so they don’t later claim you simply forgot them, or had a clouded mind at the time of your will drafting. But do anticipate that even with these good reasons, you might be creating a lot of hassle for your executor and beneficiaries because of the estate litigation risk that is being created.
Far better to give someone substantially less than others similarly placed - like $25,000 rather than $100,000 - because it will blunt the litigation urge.