Tips to Help Siblings Avoid or Resolve an Estate Battle

Tips to Help Siblings Avoid or Resolve an Estate Battle



Category: Estates | Inheritances

Sibling disputes often erupt after a parent dies and it’s time to divide up the assets of an estate, and these fights can result in lengthy and expensive legal actions.

However, a little forethought from parents can avoid such disputes, or they can be addressed by siblings who employ savvy strategies after a parent or both parents die. Consider the following to prevent or resolve conflict.

KEY TAKEAWAYS

  • Sibling disputes over assets in a parent’s estate can be avoided by taking certain steps both before and after the parent dies.
  • Strategies parents can implement include expressing their wishes in a will, setting up a trust, using a non-sibling as executor or trustee, and giving gifts during their lifetime.
  • After a parent dies, siblings can use a mediator, split the proceeds after liquidating assets, and defer to an independent fiduciary.
  • Parents and others may gift each child up to $15,000 (2021) and $16,000 (2022) without owing taxes on those gifts. 1
  • Using a mediator after a parent dies may be useful when emotions are running high among siblings.

Estate-Planning Steps for Parents

Planning before death can address many of the issues that arise after a parent dies. Perhaps the most important action a parent can take is to have a will that specifies which sibling receives what in terms of property. Who inherits the house? A business? A valuable painting? The answers can be spelled out in a will.

Alternatively, a parent can give directions that the house is sold and the proceeds divided evenly. If a parent wants to leave one sibling out of the will, this is legally permissible. There is no rule on disinheriting a child. However, to avoid legal challenges by a disinherited sibling, a parent should consider discussing the matter with the child or explaining the reason in the will.

Another good practice is to use a trust to specify property dispositions after death. A parent can make a revocable trust that can be changed at any time up to death, assuming the parent remains competent. Putting property in the joint name of a parent and child so that the asset passes automatically to the child when the parent dies is another way to avoid conflict.

This can be done, for example, for a bank account, brokerage account, or real estate. Using a non-sibling executor or trustee for the estate can also help keep the peace. A third party who does not stand to gain from any decisions regarding property distributions may be a good idea, particularly if a parent believes there could be sibling disputes after they die.

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See the original article here: https://www.investopedia.com/articles/wealth-management/022916/tips-help-siblings-resolve-estate-battle.asp


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