To be honest I have lost track of how we refer to different generations.  I know baby-boomers and generation X, I’ve heard tell of generation Y, but I’m lost after that.  So let’s just call everyone under age 21 as of now “generation X-Box.”  How do you deal with the transfer of wealth to generation X-Box?

The reason Trust and Will litigation lawyers are in business today is largely due to sibling rivalry—just like children fighting over an X-Box, they fight over a parent’s assets.  And parents have a hand in that as well, sometimes not planning the transfer of their assets or sometimes planning in a way that defies reality.  For example, parents like to put the oldest child in charge after they are gone, is that a good idea?  Maybe or maybe not depends on the personal traits of the oldest child.

Sometimes none of the children should be appointed to act as successor trustees because there’s just too much discord among the children.  That’s when parents need to be realistic.  There are other options, such as corporate trustees or private, professional trustees, that can do a great job administering the Trust while they remain above the fray created by sibling rivalry. 

In fact, some sibling rivalries are so explosive, that just having one child acting over another is enough to create an atmosphere of doubt and mistrust—which could be justified or just perceived.  Either way, tensions mount and Trust matters boil over into Court action.  That’s great for the lawyers, no so good for the Trust and its beneficiaries. 

Further, family dynamics are become more complicated with people being married multiple times and having children from different marriages.  Then the tension truly shoots through the roof when the children of one parent are fighting with the children of the other parent. 

What’s the answer?  Not every potential conflict can be resolved with planning, but there is much that can be done with a proper (and realistic) estate plan.  Here are some lessons we have learned from our year’s of litigating trust and will messes that can help in passing wealth to generation X-Box:

  1. The Oldest Child doesn’t always know best.  It is common for parents to name a child as their successor trustee, and sometimes multiple children.  The problem is that (1) not every child is ready to handle that type of responsibility—especially where the law requires that the trustee treat all beneficiaries fairly—(2) sometimes the mere fact of having a child in charge causes problems with the other children.  The solution: be realistic with your choice of co-trustee.  If your going to name a child, pick the right one, make sure they can handle the job of trustee and that they understand their duties as trustee (few people really understand their duties).  Or consider using either a corporate trustee or a private, professional trustee.  Private, professional trustees are a great alternative because they charge less than corporate trustees (usually) and provide more hands-on attention to the Trust administration.
  2. Co-Trustees can lead to Co-headaches.  Some people think the solution to sibling rivalry is to put all the kids in charge, that way no one can complain about being left out.  Bad idea.  Children who can’t get along should not be expected to work together in managing the Trust and its assets.  The better solution is to find a neutral third party. A trusted friend or advisor, a private professional trustee, or a corporate trustee—anyone other than the children.
  3. Messy Amendments = Happy Lawyers.  Want to help keep lawyers employed?  When you go to amend your Trust or Will don’t do it with the help of a lawyer.  Instead, write on the document, in the margins without signing it, or write on the back of a napkin, or use a computer program without knowing how to complete the amendment.  All of these techniques will end up in a mess of a plan, and a messy plan means good business for lawyers because there’s more to argue over. 
  4. Information is Key – don’t be shy about what you want.  And whoever is placed in charge needs to know the duties and obligations they are undertaking.  Share at least some basic information with your successor trustee.  You don’t need to show them your Trust or Will, but tell them you have it, where it is kept, and what you expect when the time comes.
  5. Don’t be Afraid to Lay Down the Law – if you’re going to disinherit someone, tell them beforehand.  I know it is hard to do, but it can save those children who are not disinherited a heap of trouble after you are gone.
  6. If you really want a personal memento to go to one child, give it to him or her while your still alive.  Small personal items can be easily lost, misplaced, overlooked or stolen.  And nothing ignites family discord like fighting over the smallest personal item.  It may have no economic value, but there’s tons of emotional value and that will keep the fire of litigation burning for years.
  7. Make sure your assets are properly titled.  There’s nothing more frustrating than seeing a perfectly good Trust go to waste because the decedent’s assets were not titled in the name of the Trust.  Hopefully there is a pour-over Will that transfers the assets to the Trust, but that’s not always the case.  So some assets pass under the Trust, some pass under the Estate, and some may even pass under joint tenancy.

These are just a few of the biggest issues we see on a daily basis.  When it comes time to sit down and plan your estate, give these items some thought and be sure you are ready to hand your estate to generation X-box with as little fighting as possible.