Avoiding Inheritance Conflict in Your Family
Presented by John B. Steiger
You may have a will in place, but have you taken steps to ensure that your children won’t be left bickering over inheritances once you’ve passed away? In even the most close-knit clan, grief over a family member’s passing can bring tensions to the surface, especially when money is involved.
A typical scenario
Throughout their marriage, John and Jane Smith had kept a close eye on their finances. Working with their financial advisor, they’d saved and invested carefully over the years, and they planned to leave a sizable inheritance to their three children, Jack, Olivia, and Harry. Unfortunately, though they had prepared a will, John and Jane failed to outline exactly who would get what. They named Jack, the eldest child, as the beneficiary on their life insurance policy and other accounts, assuming he would divide up the funds equally. They left meaningful family jewelry to Olivia, because she was their lone daughter, and gave Harry all of their artwork, since he loved to paint.
Because the children had always been so close and gotten along so well, John and Jane figured they would split everything three ways and, if someone wanted a specific item, they’d work out an equitable arrangement. But things didn’t turn out as the Smiths had planned. Upon discovering that he was the sole legal beneficiary of his parents’ accounts, Jack decided to keep the money for himself, using it to pay for the vacation house he and his wife had long dreamed of buying. In his view, Olivia and Harry had received their fair share of the family estate and there was no need to split the money three ways. A family inheritance feud ensued, with Olivia and Harry vowing never to speak to Jack again.
Tips for keeping the peace
You may be thinking, “That would never happen to my family!” But situations like this are all too common. To help prevent inheritance conflict among your children, consider these suggestions:
Be realistic and communicate openly. Your children may be expecting a significant inheritance, one that could help them purchase a home, pay for their children’s education, or simply make them rich. To avoid disappointment, it’s important to give them a sense of where you stand financially and to emphasize that your finances may change, depending on medical expenses or other unexpected costs.
Keep your documents up to date. Be sure to update your will and beneficiary designations to reflect life events such as marriages, divorces, new grandchildren, and so on. Keeping your documents current will help ensure that you don’t unintentionally include someone who’s no longer part of your family or exclude someone you wish to benefit.
Address personal property specifically and separately. In addition to your last will, leave a separate list of personal property with instructions detailing who should inherit each item. The list should describe each piece of property you wish to gift, leaving no room for interpretation. That said, if you’re not sure of how to write a will, you could either consult a lawyer or get it done using sites like 12Law.com.
Don’t task the oldest beneficiary with distributing your assets. It’s not wise to leave one child to handle the distribution of your assets, trusting he or she will do the right thing. If you want all of your children to inherit equally, put them all down as beneficiaries.
Give everyone a role. Dividing assets equally can help reduce conflict among heirs, but it’s important to think about the division of responsibilities as well. When you assign responsibility for handling your estate, you’re making a statement about whom you think is capable and trustworthy. Consider how your children will react and, if possible, assign everyone a role, even a small one, to play in the decision-making.
Explain yourself. What happens if you don’t want to split your assets equally among your children? Many parents consider this option if one child is financially successful while another is struggling. If you plan to distribute your assets unequally, write a personal note to accompany the will, explaining your reasoning. This may help reduce any resentment your heirs may feel.
Eliminate uncertainty with a trust. A common estate planning tool, a trust can help you manage and control the distribution of your assets in the event of your death. Through a trust, you can elect to distribute your assets in increments if you pass away before your children are mature enough to manage money wisely-for instance, one-third at age 25, another third at 30, and the final installment at age 35. You might also consider using a trust to hold a distribution until a later date if your child has financial problems or creditor concerns. Aside from that, you may want to hire an estate planning attorney from a firm similar to J.S. Burton PLC to assist you in writing a last will. Your estate planning attorney can also help you reduce any estate or inheritance taxes. They can also help the executor of your will transfer assets to your beneficiaries after you die. They can also assist with probate if it becomes necessary.
Protecting your legacy
Though the estate planning process involves many legal responsibilities, it’s important not to lose sight of the personal aspects. If you plan to leave an inheritance to your children, be sure to consider ways to reduce conflict once you’re gone. You can sit and discuss these with Estate Planning Lawyers Gold Coast or wherever your property is based so that they can help you decipher a rational solution, in the interest of both you and your family members.
By carefully planning and setting expectations ahead of time, you’ll help protect the most valuable part of your legacy-your family.
This material has been provided for general informational purposes only and does not constitute either tax or legal advice. Investors should consult a tax preparer, professional tax advisor, and/or lawyer.
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John B. Steiger is a financial consultant located at 460 Totten Pond Road Suite 600 Waltham, MA 02451. He offers securities as a Registered Representative of Commonwealth Financial Network , Member FINRA/SIPC.. He can be reached at 781.547.5621 or at john@financialconnector.com.
2013 Commonwealth Financial Network
At Cleary, we are committed to a holistic approach of protecting and preserving our clients’ financial assets. Give us a call today at 617-723-0700 and let us know how we can help you.
Am I Covered if I Rent a Car on Vacation?
Have you ever found yourself in this situation? You are standing at a rental car counter, with a line behind you, feeling pressured to buy insurance. It’s a tricky decision, given the fact that you may already be covered through your existing car insurance.
When you rent a car, the car rental company may offer you an insurance plan to cover the vehicle. If you have an auto insurance policy, do you need to purchase the insurance? The good news for Massachusetts Auto Policy holders is that coverage is provided on Mass Auto Policies; however not all coverages will respond in the same way your personal auto coverages respond.
Please keep in mind these important considerations:
Your Mass Auto Policy (MAP) is NOT a worldwide policy! The Mass Auto policy only covers losses that occur in the United States (including Puerto Rico and U.S. territories and possessions) and Canada.
Most rental car companies require all drivers of the vehicle to be declared. Your MAP will only provide coverage for drivers listed on your auto policy for a rental car.
Bodily Injury and Property Damage will apply as long as you are legally responsible for the accident.
Your Collision & Comprehensive coverage provide protection, less your deductible for most damage to a rental car. HOWEVER, many rental company contracts indicate that you are responsible for their loss of rental income while the damaged car is being repaired.
In the event of a total loss or theft of a rented vehicle, the MAP will pay for the actual cash value (ACV). You could end up paying the out-of-pocket difference between the ACV and replacement cost of the vehicle.
Your Mass Auto Policy will only respond to a private passenger type vehicle. It will NOT respond to a motorcycle, motor home, or moving truck. Also, the MAP will NOT respond if a vehicle is rented for an extended period of time over 30 days or is driven off road.
We recommend that you do the following:
Carefully read and understand the rental agreement before signing as not all contracts are the same.
Many credit cards will cover damages to a rental vehicle. Be sure to check available coverage, and if there are any limitations.
Above all, make sure you have some form of insurance on the rental car. The last thing you want is to get into an accident and be underinsured.
Concerned about your personal insurance coverage? At Cleary, our experienced Personal Lines department will work with you to evaluate your insurance needs, identify exposures, and create a customized insurance portfolio. Give us a call today at 617-723-0700.
DOL Audits
Over the past year a number of contractors have been subjected to audits by Department Of Labor (DOL) Investigators. ARRA (American Recovery and Reinvestment Act) funding has reinvigorated enforcement activities. It has also become apparent that these audits are becoming more complicated to resolve.
In some cases the audits have increased in complexity; with the DOL Investigators asking for a myriad of company records, and then leaving for several weeks or months without finalizing the audit. This leaves the contractor in limbo and causes apprehension with their various customers. We recommend that in these cases the contractor send a letter to the DOL Investigator’s Supervisor and include a copy to the Regional Wage Specialist, asking for closure on the audit.
Some DOL Investigators threaten to withhold contract funds if compliance is in question. On Form WH-56 “Summary of Unpaid Wages”, the investigator will list all of the employees whom the investigator determines are due back wages. Investigators may also threaten debarment if contractors do not pay all the employees noted in the Summary of Unpaid Wages.
The Professional Service Council met with DOL officials last December at The Wage and Hour Division in Washington, DC due to the vast number of complaints regarding DOL Audits. The DOL agreed to send some representatives from their Wage and Hour staff to the PSC- SCA Training program in Wash DC. This program was held in March 2013 and has an upcoming session in October.
Any contractors, who do not have experienced personnel capable of handling DOL audits, may benefit by sending some of their employees to the next SCA training class that covers DOL audits.
If you would like additional information on SCA training programs, you may contact Albert Corvigno at acorvigno@marallc.com or call him directly at 252-312-4853.
For additional information relating to SCA compliance please click here to read “Avoiding the Compliance Pitfalls of the Service Contract Act” co-authored by Al Corvigno.
SCA Update
Effective June 19, 2013, the SCA health and welfare benefit increased to $3.81. Please click here to read the All Agency Memorandum Number 214.
At Cleary, we know how important a comprehensive benefits package can be to your continued success. Give us a call today at 617-723-0700 and we will work with you to create a plan that meets your fringe-benefit obligations and provides your employees with valuable benefits.