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How to Bulletproof Your Estate Plan Against Litigation After Your Death

December 27, 2022

When it comes to an estate plan, there is no way to guarantee that beneficiaries and/or creditors of your estate will not pursue litigation after you die. Unfortunately, parties can try to contest your will or object to some aspect of a trust you created (including trust distributions, beneficiaries, trustees, or other matters) as our judicial system is predicated on giving people the right to sue even if their claims are unfounded. However, there are best practices when drafting your estate plan to limit the possibility of litigation, including the ones discussed below. 

Communicate How You Want to Divide Your Estate Plan to Your Family

Many people draft their estate plans, including wills and trusts, without informing their family members. They do not share their legal documents or explain their wishes. This is potentially a huge mistake. A common reason litigation arises is because the estate plan comes as a surprise to beneficiaries or the executor. The will reading is the first time they learn of their loved one’s desires and they are hurt because they were left out or treated unfairly as they see it.

Depending on your family and your circumstances, it may be helpful to have an open and honest conversation with your relatives about your estate plan. By communicating your wishes before your passing, your beneficiaries and executor are much more likely to understand your wishes and feel comfortable following your estate plan. 

Pick the Right Executor for Your Estate Plan

The role of an executor is extremely important and selecting an appropriate person can minimize the risks of litigation. However, the decision can be difficult particularly if you have a large or complex estate. 

Your choice should be well thought out. Picking your oldest child simply because he or she is your oldest may not be the best decision if the person is unwilling or unable to serve and could result in family conflict or other problems. You want someone who will do his or her best to ensure your plan is executed properly. The person must understand your wishes, have common sense and good judgment, and be able to hire capable advisors when needed. It is recommended that you talk to your chosen executor about the requirements of acting as executor and be sure that he or she is willing to serve. You should also name a successor executor in your will in the event the first person named cannot or will not serve. 

Draft Language in the Will to Deter Litigation or Resolve Disputes 

Unfortunately, just because your beneficiaries are amicable while you are alive does not mean that they will remain that way after you die. As a result, it is best to be proactive and include certain provisions in your will to reduce the risk of litigation. For instance, an in terrorem or no contest clause provides that if an individual unsuccessfully contests the will, they will lose their inheritance. We will discuss this clause in more detail in a future post.

Another example is to provide a way to address disputes when you leave an asset to multiple beneficiaries. Let’s say you leave your home to all three of your children. What happens in the event one child cannot afford to maintain the home? Or one child wishes to own the home outright? Or your estate ends up with a tax obligation that can only be met if the executor sells the home and uses the proceeds to pay the outstanding taxes? 

Your will can include a provision allowing the beneficiaries to keep the home, if they agree, or sell the home, perhaps with a right of first refusal. This would allow one child to buy out the interests of the others prior to the home being sold to a third party. 

In the case of leaving a business to multiple heirs, you may need to provide additional instructions in the event of a dispute. The individuals may not want to work together or be tied together after your passing. Therefore, it is important that your  estate planning documents include language that addresses what happens if their relationship breaks down or if one person wishes to sell their interest. As with the home, this could include a clause that provides for the sale of the business with a right of first refusal. 

Work with an Experienced Estate Planning Attorney

An attorney can advise you about how to insulate your plan from litigation as much as possible. While it is impossible to eliminate all risks, there are several steps that can be taken, as shown herein, to prevent litigation after your passing. Our attorneys can help you develop an estate plan tailored to your needs and goals that also minimizes the risk of a lawsuit. Contact us for help today.

 

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