Putting together an estate plan is beneficial for a number of reasons. It helps you to get a better understanding of your financial standing, can help guide future investment decisions and can even translate to reduced tax obligations. This is all in addition to helping to ensure your assets are distributed according to your wishes.
But what if you think your estate plan could lead to disagreement amongst your heirs? Can you reduce the risk of conflict?
There are some proactive steps that can help. Three options include:
- Communicate. This is likely the most obvious, but it’s true. Taking the time to communicate your wishes with your heirs can reduce the risk of conflict. Conflict is often the result of one heir believing they understood what you meant for your estate and that someone else got it wrong. Clearly spelling out your wishes yourself can reduce this risk.
- Choose a trustee or executor wisely. This individual or business will either manage the trust, if used, or the estate. Sometimes families can reduce the risk of conflict by using a professional to guide these conversations and make these decisions instead of a family member.
- Make use of gifts. Gifting during one’s lifetime can help to ensure the asset goes where you intend while letting you enjoy the benefits to your loved ones and also reducing the risk of conflict during administration of the estate.
It is important to note that a strategy that made sense five years ago may not work today. Take time to regularly review your plan and update it to make sure it represents your intentions well.