When considering what to pass down to heirs, it’s easy to focus on bank accounts and real estate. But the items with the most importance often aren’t the most valuable on paper.
Estate planning often focuses on financial assets, but sentimental possessions, like a cherished pie plate, can hold just as much significance and, if overlooked, may spark family disputes. Without clear instructions, unresolved family dynamics can surface, potentially leading to resentment and fractured relationships. To protect both financial and emotional legacies, estate plans should include thoughtful decisions about treasured belongings, helping to ensure harmony alongside inheritance.
As more and more of the baby boomer generation reach retirement age, trillions of dollars in family wealth are going to be transferred from older to younger generations. But many heirs (and their advisors) are not prepared for this transition. Without proper planning and communication, families often face costly estate disputes, legal challenges, and misunderstandings that may result in a substantial loss of inherited wealth. It is just as important to think about the non-financial aspects of dividing your property among children and other heirs as you do about the financial aspects.
According to Cerulli Associates, the “Great Wealth Transfer” is underway.[1] Now through 2048, an estimated $124 trillion will be inherited or donated to charities, creating a major shift for families and financial advisors alike. With so much wealth changing hands, differing opinions on investing, saving, and preserving assets are bound to come up. On top of that, families may have conflicting views on which charitable causes to support. Navigating these transitions will take open conversations, thoughtful planning, and a shared vision for the future.
And inheritance disputes aren’t always about money. Even in a multi-million-dollar estate, loved ones can end up arguing over small, sentimental items—like jewelry, clocks, or even a Thanksgiving turkey platter—that hold emotional value rather than financial worth. A big transfer of wealth can easily stir up tensions, making estate conflicts more likely. Clear planning and honest conversations can help keep things smooth and avoid unnecessary conflict.
Battles over estates can put strain on family relationships, but there are ways to help lessen the likelihood of conflict among loved ones. Consulting with your heirs, getting your property appraised, and designating beneficiaries for treasured items are important steps in estate planning.
Dividing assets isn’t just about money, it’s also about emotions and relationships. Experts suggest families look beyond taxes and consider how inheritance decisions might affect their loved ones and have conversations with them about it.
While these conversations can be uncomfortable, having them while you’re alive can help your beneficiaries better understand your wishes and thought process.
Communicating your wishes about who will inherit your personal property and assets after you die and making them explicit in your will can help mitigate a family feud.
Make a list of your assets, including bank and brokerage accounts, retirement savings, and life insurance—and note whom you have named as the beneficiaries of those assets. Then add homes and big-ticket property such as artwork, furniture, and jewelry, and consider whom you want to inherit those items. For instance, if a daughter is the beneficiary of a brokerage or retirement account, giving a home or artwork of similar dollar value to a son can help balance things out between them.
Consider asking for input. For example, you might have assumed that your son always wanted your baseball card collection, when in reality, he has no interest. Meanwhile, a box of old holiday decorations you thought was insignificant could be highly coveted by all three of your children. But be careful what you ask, as you might be opening a Pandora’s box. You may want to include a side-letter referenced in your estate plan that provides details for disposing of your personal items, without being listed in detail in the will itself.
Involving your family in the discussion allows you to clarify the reasoning behind any uneven inheritances, helping to set expectations and prevent misunderstandings. Explain that past financial support or personal sacrifices made by certain family members on your behalf may influence how assets are distributed. Providing context for these decisions can help set expectations and reduce misunderstandings.
Remember to be consistent. Listening to only the most vocal child and ignoring the other heirs or being unclear about how and why a certain decision was made regarding money or property can also breed mistrust. Some individuals put a clause in their will that says an heir who tries to contest it will get nothing. So-called no-contest phrases work well, however, only when the heir in question has enough reasons not to fight it. In some states such as New Jersey, no-contest clauses could be enforceable, while other states don’t allow them.
Rather than itemizing who gets what in your will, a simple way of dividing things up equally is to get your property and possessions appraised and then have the children or grandchildren take turns choosing what they want while you are still alive. You can also set things up to allow family members to bid on a coveted property after your death.
Life insurance proceeds can be used to compensate one heir for getting less property than another. For instance, if there’s a closely held business, one child in the business can receive stock in the business and the other children can receive insurance proceeds that equal the one child’s stock.
Often the oldest child gets named executor by default, or two adult children get named co-executors. However, these situations could open the door to sibling rivalries or resentments. If this is a likely scenario, it may be best to appoint a family member or trusted outsider who isn’t a beneficiary of the estate to be the executor. That person can get paid by the estate for his or her time in organizing papers and distributing the assets and can be a cool-headed referee for any inheritance disputes.
Another option is bringing in a mediator. A mediator can help guide discussions with your heirs as you explain your intentions, making the process smoother. They can also be useful after you pass, especially if disagreements arise over the estate. Without mediation, heirs may turn to attorneys. Once the battle begins with both sides hiring lawyers, it’s difficult to have either side-step back and compromise as the “line in the sand” has been drawn.
There’s no such thing as a “perfect” estate plan, but if you and your advisors are very clear about your wishes, values and motivations, you can take the proper steps to carry out your wishes with minimal family strife. Please reach out to us today to discuss your estate planning needs and how we can help make it a solid plan you can have confidence in.
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