Estate litigation is often the result of pre-existing family tensions. Most families will experience some level of drama or conflict after the death of a family member. However, for some families, the death of a parent, sibling, or other close family member, can spark a dispute that results in expensive, protracted litigation and causes the breakdown of family relationships. Such fights are often less about material wealth than perceived unfairness and built-up resentments. Family dynamics should be taken into account when making a comprehensive estate plan in an effort to reduce post-death conflict.
Large or blended families can be particularly fertile ground for an estate fight. In a recent survey of Canadians, commissioned by BMO Wealth Management, only 30% of respondents indicated they had discussed estate distribution plans with their parents. The survey results also indicated that parents who were separated or divorced were less likely to communicate their intentions about estate plans with their children. Family tension or otherwise complex family dynamics may reduce willingness to start difficult conversations within the family for fear of sparking a fight. This reluctance often simply postpones a family fight until after a death, rather than avoid it forever. In fact, the more complex the family dynamics, the more important it is to have the difficult conversations about inheritance before death, to help manage the expectations of beneficiaries who are intended to receive a smaller share of the estate than they may consider to be ’fair’.
Meeting with family members to discuss an estate plan can reduce the chance of disputes developing after death. A family meeting ensures that everyone is on the same page and knows what to expect after the testator’s death. A meeting also allows the chance for the testator to answer questions, provide an explanation with regard to any unequal treatment, and address concerns related to the estate plan. This may reduce the potential for misunderstanding and resentment within the family after the testator dies. A legal or financial advisor can also be present at the family meeting, which may help keep the tone of the meeting professional. The professional facilitator may also assist the testator in answering questions and explaining the rationale behind certain decisions.
At the time of the 2016 Canadian Census, 12.6% of all Canadian families with children under 24 were stepfamilies. As Canadian society changes and develops, estate law must also adapt. In families with complex dynamics, separation agreements or domestic contracts might be important components of a global estate plan. Such agreements allow parties to contract out of certain statutory entitlements that they may assume after the death of the other. In order to be legally enforceable, such contracts should be carefully drafted by a lawyer, with both parties to the contract benefitting from independent legal advice.
Choosing the right executor is another important step in creating a strong estate plan. A good executor (also known as an estate trustee in Ontario) can help ease family tension. Some may not realise that an executor does not need to be a family member. An executor may be a friend or even a trust company and the selection of someone neutral to act as executor can be especially important within the context of blended or step-families. An executor should not have any pre-conceived notions about how the estate should be administered beyond the contents of the will and other testamentary documents, notwithstanding the intentions of the testator. A family member or beneficiary can perform this role, but he or she should be made aware of the responsibilities of the role beforehand.
Communication and sound legal advice are two of the most important factors in avoiding estate litigation. A lawyer can help set up a solid estate plan, but it is up to the testator to communicate with his or her family about what to expect after death.
Ian Hull and Suzana Popovic-Montag are partners at Hull & Hull LLP, an innovative law firm that practices exclusively in estate, trust and capacity litigation. To watch more Hull & Hull TV episodes, please visit our Hull & Hull TV page.
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