Probate Executor? Tips for Defusing Volatile Family Dynamics

Sometimes death has a way of bringing out the worst in families. The death of a parent and the subsequent efforts to settle the estate can renew old rivalries among siblings. Ask those who grew up in dysfunctional families, and they’ll tell you that just because they’re older doesn’t mean that relationship problems disappear. The issues that divided that family 20 years ago likely still remain. Grudges and perceived inequities still can feel fresh. If there’s a significant amount of money to be divided among family members, things can quickly become hostile. If you’re the Probate Executor, here are some tips for defusing volatile family dynamics.

Inheritance fights are on the rise

A huge number of baby boomers have done nothing to prepare for retirement, and accumulated assets from their more frugal parents become a critical part of their retirement planning. When things go badly, people realize that they need their inheritances. A lot of people are living off the parental dole. As their parents near the end, these children grab as much as they can and are far less willing to share it with their siblings. An uneven economy, layoffs and shrunken retirement plans have hurt many.

Here are three common trigger points for family fights over inheritances:

1. Mom always liked you best

While nobody really wants to be an Executor, deep down inside we want to be asked, because we equate being named Executor as both a vote of confidence and a validation of our relationship with the person who died. It’s also an indicator of leadership and intelligence. Not being asked can create resentment toward the person who was asked. That resentment can create distrust of the process and constant questioning of the decisions that are made. If you have been named the Executor, you can minimize resentment by being sensitive to others’ feelings, staying approachable and encouraging collaboration.

2. Fair isn’t always equal

There’s often a gap between what beneficiaries expect to receive and what they actually get. One of the most common refrains is “Mom said she wanted me to have [fill in the blank] after she died.”

This becomes a slippery slope. If the Will doesn’t specify the distribution of an individual item, the item belongs to the estate. If there’s no Will, that item and everything else belongs to the estate. While some requests from family members may seem small enough, they present risks. If the Executor were to let Joanne take that one heirloom vase that wasn’t specifically bequeathed to her, everyone else will want to take something. They may decide to take one more item each. Then another. Before you know it, the estate becomes diminished.

3. Facing your judge and jury

Family members are stakeholders, and they can be harsh critics. Questions can escalate into accusations if they aren’t answered, or if the other beneficiaries don’t like the answers. Constant criticism can put tremendous pressure on Executors. Fear of conflict can be paralyzing, which is one of the reasons Probate can drag on for years.

Simple steps for keeping family members on board

An Executor may not be able to control a dysfunctional family. If you’re an Executor, what you can do is be transparent, document everything you’re doing and communicate early and often.

• Tell everyone the rules. Let family members know that there will be some collaboration. There are going to be decisions that you will have to make on your own. Just keep your siblings updated.
• Consider a Mediator. If you know that your family’s level of dysfunction could complicate Probate, consider bringing in a Mediator. A Mediator will remain neutral and work with your family to resolve disputes over inheritance. Having a third party can defuse volatile situations.
• Take care of yourself. Take care of yourself through this difficult and emotional process. Set boundaries about the time you’ll focus on Probate issues and keep up with the rest of your life. Many Executors also have demanding full-time jobs and families. It’s critical to find a balance.

California Document Preparers assists our clients with Probate. While Probate can seem overwhelming, it’s a methodical process and we assist you through each step for one fixed fee of $4,500. Schedule an appointment today by contacting us at one of our three Bay Area offices. Our dedicated team is helpful, compassionate and affordable.

Special Needs Planning: A Multigenerational Effort

A daughter and sibling steps up to bear a heavy load

Let’s step into Sharon’s shoes. She’s the sister of Andy, who is developmentally disabled. Their elderly parents now count on Sharon’s help for shopping, getting to doctor appointments and overseeing their financial affairs.

Sharon lives the closest to their parents, so by default, the bulk of their care has become her responsibility. With their own failing health, her parents can no longer take care of Andy. Without long-term care planning, whether through savings, insurance or both, all of this family care becomes Sharon’s responsibility.

This is a heavy burden to place on anyone

This is a signifiant responsibility, especially for someone with a career, which is the case with Sharon, a CPA. She has two kids, a husband and a dog, and her life gets really nuts for at least three months every year. Sharon just turned 40, and she’s trying to save money for her kids’ college and her own retirement. Some days it all looks completely impossible.

With a special needs child, the needs grow exponentially

We talk a lot about being proactive, doing comprehensive estate planning that includes Living Trusts. But when there’s a family member with significant disabilities, the stakes quickly get higher; planning for their care becomes a family affair that transcends generations. Siblings need to be involved in the planning and care of their special-needs family member.

Parents of special needs children are focused on planning for a time when they will no longer be there to care for that child. Planning must cover a range of issues:

• Who will manage the assets set aside for the child?
• Who will oversee the child’s care needs?
• What financial planning must be done now to ensure there are adequate assets to provide for that child?

Planning and financing two retirement strategies

As parents of special-needs children plan for retirement, they need to be developing and financing two retirement programs—one for themselves and one for their special-needs child.

Sharon’s story illustrates the importance of financial planning

Many parents of special-needs children envision their special-needs child living at home with the parents throughout their lives. That’s a good strategy, but if the child outlives his/her parents, it’s short-sighted. Adjusting to a new living arrangement can be traumatic for special-needs individuals. It takes time and stamina to research and leverage government and community benefits to reduce the burden on the other family members.

Does your family need to create or update a Special Needs Trust?

Make an appointment today by contacting us at one of our three Bay Area offices. Our dedicated team is helpful, compassionate and affordable.

Estate Planning: Wait Until 70 to Draw Social Security?

Many of the clients who come in to our offices are either creating or updating their Living Trusts. They’re often older, and if not retired, they’re thinking about it. As a result, we hear many concerns about healthcare, social security, disability insurance and hospice.

Jane Bryant Quinn discusses timing of Social Security payouts

Jane Bryant Quinn, the personal finance expert who writes for the AARP, discusses when to start taking your social security payments in her article, Don’t Rush Social Security. Many people start at 62 because they need the money; others wait until they’re 67. But Quinn encourages people to wait until they’re 70 because their monthly payout will be a whopping 76% higher than if they’d begun receiving their payments at 62. For those who are married, waiting will also provide the surviving spouse with a larger survivor’s benefit.

What about the strategy of drawing social security at 62 and investing the money?

Let’s say your circumstances and investments allow you to make a choice: Would you be better off drawing Social Security at 62 and investing the payments? One expert, Bill Reich­enstein, a professor of finance at Baylor University, has created a powerful Social Security calculator that allows him to apply filters, such as the effect of taxes on the additional income, probable return on investments, and cost-of-living increases. He created various scenarios, taking into account the average life expectancy of a 62-year-old, and found that it’s better to wait until you’re 70.

For instance, if you take your Social Security benefit at 62 and start growing the funds through investments, how long would it last if you then started drawing from that fund at age 70 at the monthly amount you would have gotten if you’d waited? Unfortunately, not long enough. Your fund would be gone by the time you reached age 81. That may be average life expectancy, but 40% of people live longer than that and half of those will live into their 90s. With the fund now spent, you will have to do with the reduced benefit you took at age 62.

A valid case for drawing Social Security at 62

If your health is failing and you are not worried about a spouse getting a larger survivor’s benefit, the best decision may be to start drawing at age 62. If you are not going to need the benefit and want to start drawing and investing it, you could leave a fund for your heirs. Yet for most of us, good judgment and Bill Reich­enstein prevail; it’s difficult to beat the system. Investing those Social Security benefits taken at 62 will not beat the lifetime return of those benefits you draw at age 70.

Creating a Living Trust is an important part of your retirement planning. Contact California Document Preparers at one of our three Bay Area offices today to schedule an appointment. We’re helpful, compassionate and affordable.