The number of people reporting family estrangement (prolonged breakdown of relationships between family members) is increasing.
A recent study by the Cornell University Family Reconciliation Project reported that 27 percent of Americans (approximately 68 million) are estranged from family members. Of those, 24 percent were estranged from their children and 14 percent were estranged from their parents, said Karl Pillemer, who heads the project. There are many reasons for alienation, including conflicting values and past abuse. especially divorce, Associated with a higher probability of alienation.
This complex family dynamic makes estate planning even more challenging, especially for those with estranged children or siblings who are estranged from each other.
Wills and Powers of Attorney
The cornerstone of estate planning is the will. Your client may be concerned that disinheriting estranged children, leaving them a small estate, or failing to designate them as a power of attorney may cause the children to challenge the documents.
Unfortunately, there is no way to prevent such challenges.A client’s best defense is a well-designed, well-thought-out will and power of attorney Address the estrangement directly. If a client does not have a will, the state’s intestacy laws determine how their assets are distributed. This means that a significant portion of the estate may go to the estranged children against the wishes of the client.
A will that completely disinherits children can bring state law into play. Some states allow disinheritance of adult children but prohibit disinheritance of minor children. If the descendants can be disinherited, the will should state the client’s intention to exclude the children as beneficiaries. Some lawyers recommend a separate letter explaining why the child is disinherited, but others advise against it because it could give the child a reason to challenge the will. It can be difficult for clients to get such language into writing; they may find it cruel, or give the alienation a sense of finality with no hope of future reconciliation. However, failing to specify that the children were intentionally disinherited may provide grounds for challenging the will, claiming that they were simply forgotten rather than deliberately excluded.
Even if the challenge is unsuccessful, resources and time will be wasted as the estate becomes mired in litigation. Clients are reminded that wills can be changed at any time if the relationship improves and the client is able. If a client does not want to leave assets directly to the children, but does want to support the grandchildren born to the children, the client can use a trust to name the grandchildren as beneficiaries.
If clients want to leave some assets to their estranged children, whether to acknowledge their previous relationship or to avoid guilt, they should also ensure that the will includes a no content clause disinheriting the children if they contest the will to capture a larger share.The No Content clause applies only to beneficiaries and heirs under will; it does not apply to children who are totally disinherited. One downside of this strategy is that leaving a small sum of money to the children will make them beneficiaries with the same rights as other beneficiaries to challenge the decisions of the estate and executor. Additionally, some states do not recognize non-compete clauses, while others allow them to be challenged in certain circumstances.
a key component of estate plan It is the trustee’s choice: Executor, Medical Power of Attorney and Financial (Enduring) Power of Attorney. It’s always advisable to choose at least one spouse replacement, but it’s unwise to name an estranged child out of a sense of obligation. Without a strong and positive personal relationship with the client, the child may make inappropriate medical and financial decisions that are not in the client’s best interest. Consider filling these roles with trusted family members or close personal friends.
Clients should also consider how their estate choices will affect children who are not estranged from them—especially if the estranged children are estranged from their siblings. If siblings had a bad relationship during life, the relationship may worsen after the death of a parent. Clients should avoid using estate plans to repair or build relationships. Appointing an estranged child as an executor or power of attorney alongside a non-estranged child can create conflicts. Leaving assets equally to children could result in them becoming co-owners of real estate or co-owners of a business. They need to make decisions together and cannot resolve differences that could lead to costly lawsuits.
A will or power of attorney that previously left or named the estranged child’s assets as trustees must be revoked. A will can be revoked by destroying any existing copies of the document and taking any other revocation steps required by state law.
In some cases, the latest power of attorney document will automatically revoke the old power of attorney; however, the state may require that a formal revocation document be produced and provided to the estranged child.
dealing with grief
Estrangement between family members can be a painful and sad situation for all parties. In many ways, estrangement is similar to the death of a family member and involves dealing with the grief that comes with losing a relationship. As a financial advisor, you can provide support to your clients by advising them to seek the services of a therapist, counselor or support group if they do not already have one. These avenues can help your client deal with the depression, shame, and isolation that are common in distancing situations.