Business and Finance

Entangled Estates
Emotions may run high when cherished possessions figure in a will. How can you prepare your heirs?
Written by Nancy Shumadine

When an elderly woman died, her two grown daughters came together to settle her estate, which was worth millions of dollars. The mother had requested that her assets be divided between her daughters. The cash, stock, furniture and the rest were doled out to the daughters’ satisfaction. But one item remains, and it cannot be divided: their mother’s diamond engagement ring. Both sisters want it. Each maintains she is entitled to it. And neither will budge.

So the ring sits in an envelope in a bank vault. And the estate settlement drags on, racking up fees and intensifying the ill will between the sisters. That’s not what they want, and it’s certainly not what their mother wanted. But it happens surprisingly often, says Pat Ross, head of Estate Management Services at Wells Fargo. When heirs go to court to battle each other, he says, it’s often over personal property. “It could be a $200 dining room table that’s been in the family for 50 years. The kids are fighting over who should get it and hire attorneys,” Ross explains. “Instantly, the cost of this is going to far outweigh the value of the table itself.

The skirmish could be over grandmother’s pearls or Dad’s antique toy trains. Such items are a relatively small part of a healthy estate, but they pack a large sentimental value. Add a spark of sibling rivalry or step-sibling jealousy, and conflicts ignite

Looking Ahead
The way to help avoid disagreements is to consider in advance the consequences of your estate planning, says J. Scott Hamilton, estate settlement consultant with Wells Fargo. “Will signings are often done in finely appointed conference rooms of attorneys or bankers, where too often little thought is given to the inevitable meeting in the same conference room with those people named in the documents.”

Be as open as you can with your heirs. Talk to them about their expectations. You may be surprised at what you hear. Everyone might want the battered but beloved cookie jar you hadn’t given much thought to. Conversely, that old summer home you have been hanging onto just for them may have no takers.

Keep in mind, also, that personal property is not the only potential sore spot. Any inequality can stir resentment. The owner of a family business, for example, decides to leave only one child a controlling share. Or a parent splits her wealth equally among her children but puts one child’s inheritance in trust, while the others get theirs outright. To the grieving heir hearing it for the first time, such a decision can seem like a stinging rebuke. But if you explain your reasoning in advance, your children are more likely to understand. And maybe less likely to torpedo their relationships with each other.

Writing It Down
Making choices may be too painful to discuss, it may help to write your heirs letters, which can be delivered after you are gone. Tell them what they mean to you and why you have provided for them in the way you have. “Otherwise,” he says, “it is left to the drafting attorney to explain to them your intent as expressed in the legalese of documents.” Have an attorney review the letters to your heirs, to make sure they don’t contradict anything in your estate plan. Remember to update those personal letters if your plans change.

While your pen is out, also make a list of your significant personal property and to whom you bequeath it. You then can mention the list in your will. Because it’s not a legal document, you can rip it up and rewrite it later easily. Knowing what your wishes are will help your children sort out who gets what.
But if skirmishes still arise, the executor or fiduciary will have to use other ways of deciding, such as having heirs draw numbers and take turns picking items from the estate. Another way, Ross says, is to hold a mock auction. Items go to the highest bidder, who pays out of his inheritance. The “purchase” price goes back into the estate and is divided among the heirs. “We’ve often used that,” he says, “but it’s a difficult way out of those cases.”

Attorney Deborah Hildebran-Bachofen of NC, struggled with the feuding heirs of one family until there was nothing left to do but get the court’s permission to stash the property in storage for a year, hoping the family would eventually reach agreement.
While most settlements go smoothly, Hildebran-Bachofen has seen enough strife to want to reconfirm her priorities. “I like to help families remember that they are a family through the probate administration process—and (to help them) stay a family,” she says.

Nancy is a Trust and Fiduciary Specialist with Wells Fargo Bank. As part of The Private Bank, Ms. Shumadine works with clients to understand their needs and then coordinates a team of specialists to provide wealth management services, including banking, credit, investment management and trust and estate services through Wells Fargo Bank, as well as brokerage services through Wells Fargo Advisors, LLC.

For more information Contact Nancy at 757-667-3521

Wells Fargo does not provide tax or legal advice. This article is for information and education purposes only, and should not be construed as tax or legal advice, which Wells Fargo and its affiliates cannot provide. Please consult your professional tax and legal advisors to determine how this information may apply to your own situation.

Wells Fargo Bank, N.A.
Member FDIC