An inheritance dispute is a No. 1 answer for a family feud

Some inheritance battles are public and make celebrity news. Take the case of the Playboy model who said her billionaire husband had promised her half of his estate.

At age 89, J. Howard Marshall, with a fortune estimated at $1.6 billion, married 26-year-old former Playboy model Anna Nicole Smith. He died at age 90, and a contentious and very public battle over the estate ensued between Smith and Marshall's son, Pierce. Smith was left out of the will but claimed that Marshall promised her half the estate. She alleged forgery, fraud and false imprisonment against Pierce in a complicated and complex legal battle.

Or take the case of Leona Helmsley and her $4 billion estate.

The New York real estate mogul left $12 million for the care of her dog, Trouble. But she specifically left her grandson and granddaughter out of her will. Lawsuits followed, and Trouble's portion was reduced to $2 million while the grandchildren shared $4 million from their grandmother's estate.

Hyatt hotelier and billionaire Jay Pritzker started the Hyatt Hotel chain in 1957 and died in 1999 with a $15 billion estate. He hoped his family would continue running the business together. But two of the grandchildren sued the estate, claiming Pritzker raided their trust funds of $1 billion. The estate paid them both $500 million and then divided the assets among the remaining feuding 11 relatives.

John S. Johnson was the son of one of the founders of Johnson & Johnson. When he died, he left his $400 million estate to his third wife and former maid, who was 42 years younger. Johnson's children fought the will, claiming abuse and undue influence over their elderly father by his third wife. A judge found that Johnson was not mentally competent when he signed the will and ordered the wife to pay the Johnson children $160 million.

Not just the rich and famous fight over family inheritances. The death of a loved one is an emotionally difficult and traumatic experience for any family. Far too often, regular families now find themselves locked in arguments over the inheritance.

Some family inheritance fights turn into lawsuits. Some family members get so angry that they don't talk to each other ever again. When siblings, second or third spouses, in-laws and business partners are added to the equation, the family disharmony and bitterness can last for years.

So how do you make wise estate planning decisions and avoid family inheritance arguments? The first step is understanding why families argue over estates. And the second step is to be proactive and address those issues now. Below are the main reasons families fight over estates and inheritances.

It's not just about the money

Estate battles are where families act their worst. Feelings of favoritism, being ignored, unresolved insults and long-simmering family arguments bubble to the top and fuel family fights over an inheritance. This is where you hear things like, “You were always dad's favorite.” Or, “Why would mom leave that to you? You were never there for her!” Below are the more common signs that the family will be arguing over the estate.

High-value estates

It's about money and feelings. But if the estate has little to no value, the odds of large unresolvable inheritance issues are minimal. However, the more valuable the estate, the more likely there will be a battle over it.

Naming co-trustees

In an effort to be more fair, parents often name co-trustees to manage their estate, which leads to conflict. Even loving, well-meaning relatives will eventually disagree on some issues. And if the co-trustees are adversarial at all, there is bound to be an argument.

Sibling rivalries

A parent's passing can heighten existing rivalries between the children. Struggling through grief can often trigger unresolved issues between brothers and sisters. This is the time when and place where siblings decide to settle old scores once and for all.

Undue influence

When one of the adult children is the primary caretaker for an aging parent, inheritance fights claiming undue influence are common. The caretaker child of the aging parent is typically there most of the time and may also be in charge of the parent's day-to-day economic needs. They might have access to the parent's financial accounts, so they can pay bills. This is common when the other children live in a different city than their parents. If the caretaker child is left anything more than the non-caretaker children, arguments over inheritance are more likely. Even when the caretaker child sacrifices much of their life and money to care for the aging parent, unequal distribution often ends with allegations of undue influence.

Economic disparity among beneficiaries

Even when the distributions are equal, arguments will break out if the beneficiaries are at different economic stages in their lives. The most common example is when a parent leaves a house or property equally to their children. The wealthier children might want to hold onto the property and let it increase in value. The not-as-wealthy children may need their money now and want to sell the property as soon as possible and get their share in cash. The children must decide together whether to sell or hold the property. One side wins while the other loses.

Disinheriting and the black sheep of the family

Specific children and family members may be purposefully left out of the will or trust. Sometimes the parent believes the beneficiary is financially set and does not need money as much as the other children. Other times it is because the child is estranged from the family as the result of arguments or other reasons. And in blended families, the parent's natural children may be named as beneficiaries while the stepchildren are disinherited. Not only are there hard feelings, but the odds of a legal challenge also are significantly increased. A disinherited family member has nothing to lose by going to court over the estate and tying up the distribution by years.

May-December marriages

In today's world of second and third marriages, age-gap marriages are becoming more common. Adult children are likely to sue when there is a significant difference in years between the parent and the new spouse. If an 80-year-old parent leaves their entire estate to their 30-year-old spouse, the adult children will likely challenge the will or trust.

Leaving a business to the family

Many family businesses are started with the dream of building a successful company that will be left from generation to generation. This is a noble idea if done correctly and a recipe for disaster if done without proper planning. Some businesses, like farms, own substantial real estate. Others own equipment and business assets. The beneficiaries are faced with continuing the business, selling the entire company or selling the assets and land of the business. And some of the children might be employed by the business, while others are not. In an effort to continue the company, a parent might leave controlling interest to one heir who understands the business. Many inheritance lawsuits are about family businesses.

Advance gift to only some of the beneficiaries

The parent might have given college tuition to just one child or given startup funds to another. Or one of the children might have needed help avoiding foreclosure when they lost their job. These kind and loving gifts are often brought up by the other siblings when the estate is distributed equally with no adjustment for these earlier gifts.

Most inheritance battles start because one or more of the beneficiaries feels they are treated unfairly with the distribution of assets. Successful estate planning aims to leave your family financially taken care of after you're gone. It is not to leave your family with years of stressful arguments, lawsuits and family disharmony.

Let's look at some proactive ways to ensure your wishes are carried out for your family harmoniously.

Talk and transparency

Many people are good at making financial and estate plans but terrible about discussing them with their loved ones. Many people are simply uncomfortable talking about death. And often, your loved ones do not want to imagine what life will be like without you.

People try to avoid these seemingly unpleasant topics by doing what is easiest when faced with conflict. Nothing. They avoid the subject and don't talk about it at all. This is the worst thing to do.

You and your family should talk openly and honestly about your estate plans. You do not need to involve the beneficiaries in all the details, but they should know what you are planning and why.

Suppose you have a business you want to leave to your three children equally. But you want your son, Robert, to run the business because he has been doing it successfully for years. You can put the stock in trust with equal shares to the beneficiaries. And you can leave the trustee instructions according to your wishes. And you can tell your children now what you are doing and why. Any objections can be aired and resolved so the company can run profitably and harmoniously after you are gone.

And if you are leaving the family home to your children, you can decide on some of the more challenging questions now. Should the children sell the house or hold onto it for a certain period? Will any family members be allowed to stay in the home, and for how long? Will you give the house to your children, with a life estate to your spouse? The more your loved ones understand why you are making specific plans, the easier it is for them later.

Write letters to your loved ones

You may be uncomfortable gathering your family for an estate planning meeting. You might envision sibling rivalry at its worst and the discussion devolving into a shouting match.

You can avoid the meeting by writing individual heartfelt letters and sharing them with your loved ones. Here, you can outline your hopes and goals about your estate plan and what you are trying to accomplish. This is often helpful if you plan to leave a large percentage of your estate to a charity. The letter is not legally binding but gives you a great chance to connect individually with each of the children, so there are no surprises later.

Divide assets fairly

The main reason families fight over inheritances is one or more of the beneficiaries feels the distribution is uneven and unfair. This alone often leads to arguments and sometimes lawsuits. If there is a specific reason for an uneven distribution, work with an experienced estate planning attorney to ensure the will or trust can withstand the likely challenge from the unfavored beneficiary.

Have a valid written will

Incredibly, about 60% of Americans have no will, and even more have no estate planning. Without a will, your distribution of assets to your family is left to your state's laws, not your wishes. And with no will, family feuds are common as your loved ones argue with the court and try to explain their interpretation of your wishes.

The estate laws of each state are different, and you should have an experienced estate planning attorney help draft your will. You want to ensure that your wishes are clearly expressed. And you also want to make sure that your will follows all the applicable laws and legal formalities.

A will, along with various trusts, might be just part of your estate planning. An estate planning attorney can help you ensure that all the documents are valid and work together in your estate plan.

Consider using trusts

Trusts and wills are not the same. A will is administered to distribute your property to your chosen beneficiaries after your death.

A trust is a legal entity that owns the property for the benefit of the named beneficiaries. You, as the grantor, transfer property into the trust for your beneficiaries. The trustee administers the trust according to its terms. You can establish the trust during your lifetime as a revocable trust or irrevocable trust and avoid probate on those assets. Or, you can have the trust established by your will as a testamentary trust. But, testamentary trusts are usually subject to your state's probate laws. Trusts tend to reduce inheritance fights because the trust is the owner of the property, and the trustee has a fiduciary duty to follow the terms of the trust.

Trusts and black sheep

Often, parents feel uncomfortable leaving assets to a child with little financial sense, who spends wildly or has personal issues like substance abuse problems. A trust allows you to provide for this child without giving them control of the asset or funds. You can direct the trustee on how much money to provide the child, how often and under what circumstances.

Choose the right personal representative and trustee

Wills are administered by personal representatives (also called executors), and trusts are administered by trustees. There is no guarantee that any personal representative or trustee can avoid all family conflicts. But, if you choose someone qualified and trusted by your family, your loved ones will be more at ease and less argumentative. The personal representative's and trustee's duties are to administer the estate and trust, respectively, and ensure your estate is distributed according to your wishes.

The personal representative and trustee can be a professional, a trusted family friend or even a family member. But the key is to choose someone you trust who is qualified and respected by the beneficiaries. A wise choice here will significantly reduce any friction between the beneficiaries.

Beneficiary designated instruments

Some financial assets pass can pass to your beneficiaries outside of a will or trust, like life insurance policies, annutities, 401(k)s and IRAs. These payouts pass directly to the beneficiary after your death. They are neither included in the will nor subject to probate. It is helpful that the intended beneficiaries know about these policies. And it is essential that the beneficiaries know where the policies are so they can ensure the payouts are made as agreed.

Designate personal property and heirlooms

Personal property and heirlooms are one-of-a-kind family items with great sentimental value. And some collectibles are often extremely valuable. Whether it is a baseball card collection, an antique painting or dad's 1966 midnight blue Mustang convertible, these highly coveted items should be designated to specific persons. Otherwise, the trustee or personal representative will be forced to make these decisions, and arguments are sure to ensue.

Gift items while you are living

One way to avoid some inheritance arguments over certain items is to give them away while you are alive. You have the benefit of making sure it goes to the intended loved one and the pleasure of seeing the joy on their face when they receive the gift from you. There can also be some estate tax benefits depending on the value and timing of the gifts.

Your estate plans should bring financial well-being to your loved ones and make their lives easier. They should not be the cause of daily disharmony and arguments that might turn into years of litigation.

Openness, fairness and transparency with your family now are the cornerstones to keeping the family peace during the estate's administration.

And designing the correct estate plan with the best estate planning tools will help you ensure your loved ones are harmoniously taken care of according to your wishes.

Fortunately, there are powerful estate planning tools and strategies, to help you ensure your wishes are followed. But planning the best strategies for you and drafting the best documents requires expertise in legal, financial and tax planning that an experienced Legacy Plan Network Attorney can help provide.