Protect Your Estate from Family Disputes
How will your family experience the settlement of your estate?
It is not uncommon for family members to disagree over the handling of estate responsibilities. It is also not uncommon that most executors are also family members. This can be a recipe for disaster if the will is unclear and/or the executor mishandles their duties.
Since the executor is both legally and financially responsible for any legal disputes against the estate, family disputes leading to litigation often mean significant harm to family relationships.
Here are 4 tips on how to avoid family disruption and litigation:
Tip #1: Make sure you have a will and keep it current.
A will that does not reflect your current family situation can cause disruption amongst family members at the time of settlement. Over 50% of Canadians have no will, which can leave the estate subject to government rules, namely unexpected settlement distribution, limited access to funds and delays in asset payment for family members.
Tip #2: Make sure your executor is experienced or seeks assistance in the administration of their duties.
Executors are personally liable for errors they make in administering an estate. Any missteps can trigger a claim against the estate, and these are often filed by a family member. Consider assigning a third-party professional executor instead of a family member.
Tip #3: Prepare ahead of time if you know there is dysfunction in your family.
Family grievances and grudges surface after the death of a loved one. If a family member is also executor, family disputes make their role very difficult. They often face pressure from the family to allow them to take possession of their loved one’s personal belongings prior to the executor doing an inventory of estate assets and repayment of debts.
Avoid this by making it clear in your will the distribution of personal belongings. Assign an executor advisor to support your executor in their duties or consider assigning a third-party professional executor instead of a family member to avoid these types of situations.
Tip #4: Make sure all loans are clearly documented in your will, especially to other family members.
Undocumented, or poorly documented loans from the deceased may require collection by the executor as they are legally required to claim it. It’s not uncommon for family members who received a loan from a parent to state it was a gift. The executor is required to represent the estate’s best interests by requesting repayment of the loan.
Review Your Will - Review Your Executor
These tips can help you to avoid family discord. It’s a good idea to look at your will to see if your estate could be vulnerable to any of these common litigation mine fields. Do you want to leave your executor, who is potentially a family member, with the risk and disruption of litigation? Don’t let your legacy be tainted by family discord.
