Fighting over the Small Things

Estate Planning in Blue Springs

Below is a great article on some key issues in estate planning.  As it points out. we have seen a lot of these disputes over the years.  Although we certainly see our fair share of disputes when it comes to large assets, there are many times disputes over the small things – like wedding rings and pictures.  These disputes can really wreck the estate planning procedures, whether it be in Johnson county or in our Blue Springs office.  Take a look and then feel free to call us with your thoughts, comments, etc.

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People often spend a lot of time crafting estate plans that lay out how their big assets ” from cash to homes and securities ” will be divided among their children, grandchildren and everyone else down the line. But they sometimes give far less thought to the other stuff ” those personal effects that may have little monetary value but so much sentimental value. Yet it is the decisions about those items that often cause problems in a family.

Teams of highly paid lawyers and advisers can divide the most complex estate among heirs of varying ages from different marriages in a way that is equitable. But if they are asked to decide who gets the tarnished tea service in the dining room, they are apt to bow out and wish you good luck.

“There aren’t any magical solutions,” said Marlene Stum, a professor in the family social science department at the University of Minnesota and author of “Who Gets Grandma’s Yellow Pie Plate?”

Her book offers six major principles to help people divide assets without tearing apart their family. The process starts with “really recognizing how it’s not simple or trivial but laden with emotions,” she said.

Some of the principles should be obvious, like recognizing that items have different meanings to different people, that divisions like this come at emotional times and that no one in the family really knows the best way to do this.

But at the core of Ms. Stum’s work is the concept of what fairness means and an acknowledgment that conflict will happen but can be managed.

Since fairness means different things to different people, Ms. Stum suggests creating a process, whether it be drawing lots, letting people pick in birth order or devising something else. What’s important is that the process is followed.

“Even if you’re really irritated that one sibling got what you really wanted, if you bought into the process, you’re probably going to buy into that outcome as opposed to the sibling who comes in and cleans out the house,” she said.

Parents who think that they can wait or that their children will sort out everything without guidance from them are generally not being realistic, said John A. Warnick, an estate lawyer and the founder of the Purposeful Planning Institute.

“I ask parents to think just for a second what it would be like on Christmas morning if your children ran downstairs and there were all of these presents, bright and shining, big and small, but with no name tags on them,” he said. “Can you imagine the free-for-all that would ensue?”

Doing nothing and believing that your children will divide things without quarreling, he said, will not work. “It’s the denial that my children will never fight, they’ll never quarrel, they’ll just accept it,” he said. “That denial is a temptation for many people to not put the time and energy into carefully designating and selecting personal property.”

Tracy Bennett, a psychologist in California, said she had to divide the estates of two parents and a stepmother in two years without guidance from any of them.

With her father’s estate, she gave up everything, even items of sentimental value, to avoid conflict with her sister, with whom she had a fraught relationship. When her stepmother died about a year after her father, mistakes made on the titles of assets in his estate led, she said, to her stepmother’s family getting a house and other items that should have gone to her and her sister.

By the time she got to her mother, who had to be moved into a nursing home for dementia patients, she said, she was exhausted by her do-it-yourself approach. She hired a professional conservator and used an early version of a software tool called FairSplit that allowed her and her sister to pick what they wanted in rounds, without having any personal contact.

She said the conservator approached her sister, who lives in Idaho, and said that this was the best way to divide things equitably. This time, Ms. Bennett said, she got the things she wanted ” a few sentimental items plus kitchenware for a daughter moving into her own apartment. Her sister got more things, but that did not bother Ms. Bennett.

“It was a good deal for her,” she said. “It was a great deal for me because I didn’t have to talk to someone who causes me so much emotional trauma. It was a blind, fair split. If she had known what I wanted, she would have prioritized it to spite me.”

David MacMahan, an entrepreneur and the creator of FairSplit, said he designed tools for three contentious times in a family: death, divorce and downsizing. In any of these situations, the kind of gamesmanship that Ms. Bennett alluded to can be minimized, if not avoided, by limiting the personal contact and putting the selection process online, he said.

“Parents never know what’s important to the kids,” he said. “Is it dad’s World War II medal? We combined emotional value and monetary value here.”

In creating the tool, he said, he drew on his own experience in two painful divisions of items ” after his father’s death and his own divorce.

“There’s almost always a section in a will saying divide everything else equally among the kids,” he said. “That section tears families apart. Kids fight so much.”

The tool uses selection rounds so that each child or grandchild can pick the things they want, assigning more points to things they covet. This system can be set up to allow certain family members to go before others ” say children before stepchildren ” or to allow heirs to pick up to a certain number of items in each round using a system of 500 points to bid for them.

The system also tracks the items’ monetary value, determined by an appraiser, so the selections can be calculated into the overall split of financial and real estate assets. “So if I put all 500 points on Dad’s old Bentley, it goes to monetary value, too,” he said.

Julie Hall, an estate expert specializing in personal property, said that whether the division is done online, in a room or through costly lawyers, what is needed is graciousness.

“The decisions those of us who are left behind make really should honor the loved one who died,” she said. “It requires give and take.”

To that end, she suggested that people always bring in an appraiser. In one instance, with a family clock that several children wanted, Ms. Hall said she suggested that their mother get the clock valued ” it was worth $7,500 ” and give it to her oldest child, per family tradition, but then give $7,500 checks to her other children to equalize things.

“There were some rumblings, but the money went over well, as I knew it would,” Ms. Hall said.

Sometimes the best strategy is the simplest one: Ask people what they want ahead of time.

“If one child loved the cuff links or one child loved a painting, wouldn’t it be helpful to know that in advance?” said Stacy Allred, a wealth strategist and the leader of the Center for Family Wealth Dynamics and Governance at Merrill Lynch. “We’ve done this several times. It turned out different people had the highest affinity to different items. Then, the value was equalized at death with other assets from the estate.”

Of course, such talks force people to confront the inevitability of death. The alternative is to keep quiet and risk having their stuff becoming the stand-in for emotions that roiled a family while the parents were alive. “You need to recognize the powerful messages in who gets what,” Ms. Stum said.

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