The Money Mustache Community
Learning, Sharing, and Teaching => Ask a Mustachian => Topic started by: msbutterbean on August 30, 2019, 11:40:57 AM
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I found the inheritance drama thread (https://forum.mrmoneymustache.com/antimustachian-wall-of-shame-and-comedy/inheritance-drama-you-got-any-stories-wanted/) at the start of my vacation earlier this month and it became my beach read for the duration. What a perfect combination of drama and entertainment. Thanks to everyone who contributed over the years.
Now to my question. I am about to put together my first will and trust (brief profile: minor children, a house, retirement accounts, a term life policy for the kids, an ex-husband, and a current live-in, non-spouse partner). The advice I've read everywhere talks about how important it is to use a lawyer so you don't make any mistakes that will require the involvement of probate or the courts, but for almost all of these horror stories there was a lawyer-written will, but something was set up incorrectly or otherwise challenged by family members.
Is there anything I can do before or while working on these documents to make sure they are done right? I have a lawyer that I plan to use (recommended by an associate), but are there any vetting tips I should keep in mind? Any resources you'd recommend I read on the process that will help me better communicate with the lawyer?
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The best way to avoid inheritance drama is to die broke!!! All jokes aside check with who ever you have your life insurance with. The life insurance I buy through my work provides a free sit down with an attorney and will write a will and trust totally free of charge. I read the fine print to find this little loop hole. No one at my company had even realized it and they where all thankful when I pointed it out to them.
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To some extent, you can't prevent drama. People can challenge anything just likey they can sue someone for just about anything. It doesn't mean they will be successful, but it does mean a headache and probably legal expenses for everyone.
If you have greedy, drama-prone, or otherwise selfish/self-involved people in your life, you can't change that.
In addition to getting a solid will done by a legal expert, I'd say that being clear upfront with everyone helps, especially if there are surprises or unusual circumstances. In your life, that might mean being very clear with the partner and the Ex where your money is going, as well as to whoever will care for the kids (guessing the Ex?) and in what form they will receive that money (with what legal strings).
Also, let everyone know who will be named executor.
If there are special pieces, let everyone know that Timmy gets grandma's wedding ring and Susie gets the not-valuable but sentimental blue photo album. And name those things in your will if possible, or at the very least in a document notarized and left in place where everyone can access it and no one an hide it.
It seems like much of the time, drama is over minor things, like someone pillaging the contents of the house, not about challenging the $100,000 left to cousin Al. If you anticipate drama, having a thorough home inventory could help, but would on go so far.
My parents have been very clear. There are a few pieces designate for my sister and me. We both know where the documents are. Mom went so far as to drive my bk the bank branch that holds their safety deposit box (though the address is also listed in their documents). We know my sister will be executor. We know it's a 50/50 split, and very approximately how much that is. All of that will help prevent drama, but frankly, what will hopefully prevent most drama is just that I think my sister and I are both reasonable people, neither of whom will look to nickle and dime one another.
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My mother remarried late in life and she and her husband have kept their finances separate. His kids get his funds and there will be definite drama there. My sisters and I equally split my mom's estate valued at about a million. If there's anything we want from her estate it gets appraised and that dollar amount gets deducted from our share. It's really cut and dried. I think the most important thing is that everything is in writing.
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I think a lot of communication is what is best. When we were kids my parents didn't discuss their estate with us much but now that we are all adults we all know what the plan is. One thing that my mom did that I thought was cute was to put together a list of all household items like furniture and jewelry and send it to all the siblings. She asked us to choose the items we wanted and rank them from most to least wanted. Once we did that she created a list that she put with the wills. Turns out we all had different top "wants" so no drama.
My dad discusses his estate with us all the time. We've actually asked him to stop because at this point we all know and don't really want to think about their deaths anymore. I suppose there could still be drama after they pass but it's hard to imagine that we would ever get really mad at each other.
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Do everything you can to keep assets out of probate. The will should really just be a "catchall" for misc stuff, and possibly the house if you don't set up a trust for that.
All IRA/41k/bank accounts/etc should have payable-on-death beneficiaries, and contingent beneficiaries in case the primary beneficiary is already dead (ie, spouse is the primary beneficiary, kids are contingent beneficiaries)
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I agree with pretty much everything said above. Statistically you're very unlikely to die for many years. In the long run ensure that you don't raise entitled, dependent-on-parents-adult-children who will try to screw their siblings so they can continue to ride the gravy train.
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I'll add this. We have someone in the family, currently set to inherit a moderate amount. (IIRC, it's either $15k or $25k) He's the only one likely to cause a stink. I have considered asking a lawyer about a clause to either disinherit or reduce inheritance to a token amount ($1000, perhaps) to anyone contesting the will. That would hopefully make it more likely for this person to not make trouble for the executor, and not get openly greedy. It's a person who won't have regular access to our home so pillaging the goods is unlikely. (Leaving him out of the will entirely isn't an option we are comfortable with, and doesn't necessarily make it less likely he'd cause trouble.)
Most of our estate goes to charity. (We have no children.)
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Aside from people who are just jerks, and will stir up trouble no matter how you write the will, I agree that the best way to avoid drama is to communicate up front, both how it's going to be divided and if you know, a rough amount (having read multiple examples of people who thought the estate was much bigger than it turned out to be, and caused lots of drama). I think some people want to avoid hard conversations and end up just leaving them for the survivors to have. Being honest up front is especially important if, for some reason, the estate isn't going to be evenly divided.
In our family, the tradition for several generations now has been that the estate gets divided between the children, and it is up to their parents to decide what the grandchildren receive. That has avoided hard feelings over families with grandkids and without, and stepchildren who have been part of the family for more or less time. (Naturally, the grandchildren do get some small items to remember their grandparents by.)
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Both my parents and my in-laws ensured siblings had a chance well before death to go through the house and decide what items/furniture etc each wanted.
When my FIL passed and my MIL downsized, everyone knew of the pieces she would not be moving, which would go to who with no drama.
In the case of my parents, my father's gun collection is where my brother and I spent the most time divying up. My dad still retains all rights to sell/trade any and all of them of course, but at least we have them divided up ahead of time so there won't be any extra drama.
Everyone talks about the money, but honestly heirlooms can really get the blood pumping especially if there was some sort of informal understanding that never made it on paper.
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Lots of good advice here. I’ll echo @Villanelle in suggesting a no contest clause just in case. Having something like that in there puts a nice lawsuit deterrent in place to keep everybody working together in good faith.
https://www.nolo.com/legal-encyclopedia/no-contest-clauses-wills-trusts.html