Nine Ways Your Client's Plan Could Breed Conflict
Friction between family members can escalate during a scorching summer heatwave. Likewise,
a flawed estate plan has the potential to breed conflict, mistrust, and financial turmoil among
your client's beneficiaries in several ways.
Lack of a plan. If your client fails to create an estate plan altogether, it can lead to significant
disputes and confusion among their family members. Without clear instructions, loved ones
could argue over what the client's intentions were, and state laws will dictate the distribution of
accounts and property in a manner that could be inconsistent with your client's wishes. This can
result in some individuals feeling left out or receiving less than they anticipated.
Vague or generic plan. If your client's estate plan lacks specificity or fails to address important
questions, it can open the door for interpretation and disagreement among your client's
beneficiaries. Detailed instructions and provisions in the plan can help prevent disputes and
provide clarity as to how your client prefers different situations to be handled. Without clear
instructions, disputes may arise regarding distribution of the client's accounts and property,
guardianship of minor children, or your client's intentions. This uncertainty can lead to protracted
legal battles, strained relationships, and irreparable family rifts.
Outdated plan. Circumstances change over time, and your client's plan may no longer align
with their current wishes or family situation. For example, if a beneficiary named in the plan
predeceases your client, it is crucial to have contingencies in place. Financial institutions may
also be hesitant to accept outdated estate planning documents such as a financial power of
attorney. Regularly reviewing and updating the estate plan helps ensure its relevance and
effectiveness.
Unequal treatment of beneficiaries. While your client has the right to distribute their money
and property as they see fit and in the manner they think best, treating beneficiaries unequally
can create tension and hurt feelings among family members. Open communication and
discussing the reasoning behind such decisions ahead of time can alleviate stress, help
manage expectations, and minimize conflicts.
Unclear wishes regarding care and decision-making. Apart from money and property, your
client's plan should also address their wishes for medical and financial decision-making if they
become incapacitated. If your client fails to provide clear instructions, it can lead to
disagreements among family members who may have different opinions about the client's care.
To prevent conflicts, it is important that your client appoint reliable decision-makers and clearly
communicate their wishes.
Conflicting decision-makers. Conflicts may arise when multiple individuals, such as children,
are given priority to serve as decision-makers. Each person may have different philosophies or
opinions about the client's care, leading to disagreements and potential disputes. It is crucial to
consider these dynamics and select decision-makers who can work together harmoniously.
Unexpected tax consequences. Inadequate estate planning can lead to significant tax
liabilities that may deplete the wealth your client intended to pass on to their loved ones or
favorite organizations. By leveraging effective tax planning strategies such as trusts or gifting,
your client can potentially minimize estate taxes and maximize the financial legacy they leave
behind.
Business succession issues. If your client owns a family business, a lack of succession
planning can be particularly detrimental. Without a well-defined plan, conflicts may arise
regarding leadership, ownership, and the future direction of the business. This can jeopardize
the continuity of the enterprise and strain relationships among family members involved in the
business.
Emotional toll on loved ones. A poorly crafted or outdated estate plan can place an immense
emotional burden on your client's loved ones during an already challenging time. Without clear
guidance, your client's family members may be left guessing their wishes, resulting in anxiety,
resentment, and fractured familial bonds. By proactively addressing potential conflicts in your
client's estate plan, you can help your client alleviate potential emotional strain on their
beneficiaries and foster a sense of unity.
To mitigate these potential conflicts, it is advisable for your client to consult with an experienced
estate planning attorney to create a comprehensive and up-to-date plan. Regularly reviewing
and updating the plan as circumstances change can help ensure that their intentions are clearly
communicated, reducing the likelihood of conflicts among their loved ones and protecting their
legacy.
MEREDITH | PC
4325 Windsor Centre Trail
Suite 400
Flower Mound Texas 75028
214-513-1013
This newsletter is for informational purposes only and is not intended to be construed as written advice about a Federal tax matter. Readers should consult with their own professional advisors to evaluate or pursue tax, accounting, financial, or legal planning strategies.
You have received this newsletter because I believe you will find its content valuable. Please feel free to Contact Me if you have any questions about this or any matters relating to estate planning.
