I came across an interesting article discussing a recent survey of professionals, including those in the financial and estates area, conducted by TD Wealth.
Almost half of the participants (for the last two years in a row) cite family conflict as the biggest threat to estate planning. As for the types of family conflict, three are reported as most prevalent: (1) the designation of beneficiaries, (2) not communicating with family members, and (3) working with blended families.
Is there a solution? What immediately comes to mind is the Family Conference, which we have podcasted about at length[1]. It is professionally mediated, and provides a forum whereby the testator reveals his/her proposed estate plan to intended adult beneficiaries, with the objective of obtaining their approval of the plan. The attendees include the testator, the beneficiaries, the mediator and usually other professionals (i.e. the testator’s estate lawyer, financial planner and/or accountant etc.). Discussions are facilitated by the mediator and are held as a group as well as by way of one-on-one caucusing. Views and input about the proposed plan are encouraged to be shared, so that grievances can be aired, resolutions can be discussed and agreement on the estate plan can ultimately be reached. Like all mediation, it is a fluid process and unfolds differently in each case. An estate plan may be accepted as is, changed moderately, or completely reworked if all are in agreement.
Once an agreement is reached, a Family Constitution is prepared. A Family Constitution is a written agreement setting out the framework for the estate plan as well as the process for future family conferences and dispute resolution. Importantly, the Family Constitution is signed by all concerned and includes an agreement not to contest the Will.
The value of such a process, even without reaching resolution, is in the fact that it shows a testator’s clear intention as to how to divide his/her assets, which will likely deflate a brewing Will challenge on the basis of lack of testamentary capacity, undue influence or lack of knowledge and approval of the contents of the Will. If litigation-avoidance is the only positive outcome of the Family Conference, that alone could save the family hundreds of thousands of dollars down the road in legal costs, in addition to wasted time and unnecessary emotional suffering that usually accompanies such a path.
Thanks for reading and have a great day,
[1] Ian Hull also discusses this subject in detail in his book, Advising Families on Succession Planning – The High Price of Not Talking