By Tim O’Sullivan
Happy families are all alike; every unhappy family is unhappy in its own way.
Leo Tolstoy, Anna Karenina Chapter 1, first line
The post mortem squabblings and contests on mental condition…have made a will the least secure of all human dealings.
Lloyd v. Wayne Circuit Judge 23 N.S. 28, 30 (Mich. 1885)
You never know people until you have shared an inheritance with them.
Tom Campbell, co-founder, Family Business Institute
In its broader context, estate planning extends beyond the confines of the investment, management and disposition of an individual’s assets during a disability and following death. It also includes ensuring that intangible family values, not the least of which is family harmony, are protected in the estate planning process. The need for clarity, accuracy and comprehensiveness in estate planning documents in addressing the many technical tax, asset protection, governmental resource, and other goals involving the disposition and management of a client’s property following a disability or death have been a long-standing cynosure of an estate planning practice. However, their achievement bears only a tangential relationship to the achievement of family harmony goals.
When asked, most clients readily conclude that preserving family harmony in the estate planning and administration process is a very important goal. It is not all that atypical for clients to go as far to say that they would rather give their property to a charity than have their children fight over their estates. Given the prominence that parents normally would place on this estate planning goal, it would seem to ineluctably follow that addressing family harmony issues would be commonplace in the estate planning process. Unfortunately, that has not been the case, underscored—and compounded by—the virtual absence of such discussion in estate planning textbooks, legal seminars and articles. It is further attested to by the relative paucity of provisions in wills and revocable trusts, as well as in counseling rendered by estate planning attorneys, that would serve to undergird its preservation.
However, this goal is not likely to be raised by clients, who, as one might expect, are typically uninformed of the impact estate planning decisions can have on family harmony. Unlike other professional fields such as medicine and financial planning, with respect to which most individuals have become quite aware from their environment, the media and their education of their complexities and the corresponding need for professional advice when making health decisions, clients seeking estate planning advice, unaware of its nuances and complexities, tend to be predisposed to simplistic, often errant, preconceptions. It is thus left to their legal counsel to importune the consideration of this aspect, among other, estate planning considerations.
The author submits that the general failure of estate planning attorneys to appropriately address this issue, including by the author for a substantial portion of his practice, has been a major factor in the very high incidence of family disharmonies during the estate planning process, following a client’s disability, and in the post-death administration of a client’s estate. For estate planners, such high incidence has rendered the term “nuclear family” a double entendre.
The main factors for such inattention appear to be: an absence of professional sensitivity to the importance of this issue; the mistaken view that this subject matter is more appropriate for family counselors and advisors; an enduring practice inertia centering on the technical aspects of estate planning; and a lack of expertise on strategies, and accompanying form provisions, that have the capability to adroitly address this issue.
Family harmony is not the only resultant casualty. If family harmony is lost following the disability or death of a family member, the goal of reducing costs in the administration of an estate is likewise put at a high risk of failure. Although such failure concomitantly increases the need for attendant legal services, the author in no way believes this is a significant factor in such failure. Without question, estate planning attorneys would be expected to pursue what is in their clients’ best interests, devoid of any consideration of their own economic interests.
Although by far the most frequent, family relationships among adult siblings of a parent are not the only relationships vulnerable to family disharmony in the estate planning process. Also vulnerable are relationships between a parent and adult child, a parent and a child’s spouse, adult siblings and step-siblings, and between stepchildren and a stepparent. The impact family disharmony has on estate planning and administration issues is quite familiar to most estate planning attorneys, although the impact their estate planning practices have—or fail to have—on such adverse consequences would be expected to have a much lesser familiarity, the only logical reason extant such issue is not already being duly addressed.
The discussion that follows addresses estate planning issues adversely impacting family harmony and presents salutary strategies the author has found efficacious in enhancing its preservation. Such strategies are practical in nature and the legal principles involved for the most part well known to estate planners, for which few cites are needed. It will be assumed in such discussion that parents have more than one adult child, for there obviously would be little to no risk of family disharmony in a multi-child family currently having only minor children or a single-child family relating to a parent’s estate plan, save that in such latter circumstance which may result, as discussed infra, from a parent’s disclosure of the estate plan. For ease of reference, any references herein to a “testamentary instrument” or “instrument” of a parent are intended to include both wills and revocable trusts; to the estate and its administration to both probate estates and revocable trust estates; and to the fiduciary or financial fiduciary of the estate to a trustee of a revocable trust estate or executor or personal representative of a probate estate, unless the context should indicate otherwise.
Choosing the Appropriate Fiduciary
He who represents himself has a fool for a client.
Death is not the end. There remains the squabbling over the estate.
The estate planning decision likely to have the greatest impact on family harmony is the choice of financial fiduciary to serve during a client’s disability (agent under a financial power of attorney and trustee of a revocable trust) and following death (the trustee of a revocable trust and executor or personal representative of a probate estate). Although clients have an understandable propensity to prefer an adult child serving in such capacity (following their death if unmarried or normally after the death of a surviving spouse excepting second marriages), the all too frequent acquiescence of estate planning attorneys in this preference, sans a meaningful discussion with clients such decision’s potential adverse impact on family harmony, presents a very high risk of its loss in the plan’s implementation.
Estate planning clients are no more prepared to make an informed decision concerning the appropriate fiduciary of their estates in the absence of objective professional advice than are individuals in determining medical choices without the advice of a physician. The same is also generally true regarding individuals lacking knowledge in investment matters making investment decisions bereft of the advice of knowledgeable experienced investment advisors.
Based on practice experience, professional inquiries, and the polling by the author of estate planning attorneys and certified public accountants at professional seminars, the author h as determined that there is an approximate one-third to forty percent risk of significant family discord in the post-death administration of an estate attributable to a child or children serving as a financial fiduciary of a parent’s estate when a parent is survived by more than one adult child. Irrespective of the exact percentage, there is little question but that such risk is quite high. As one might expect, there appears to be a direct correlation between the number of children and number of in-laws and the degree of such risk. Interestingly, however, the size of the estate appears to be a lesser factor. As estate planning attorneys well know, a high percentage of such family...