A 20th Century American theologian, Reinhold Niebuhr, composed something many now know as the “Serenity Prayer,” in which the speaker seeks “the serenity to accept the things I cannot change, The courage to change the things I can, And the wisdom to know the difference.” Estate planning can be a lot like that. One of the keys to success in estate planning is to plan to avoid the problems that are preventable, to understand that not all problems are avoidable, and the wisdom to know the difference.
While you cannot always prevent people from mounting legal challenges to your estate plan, you can take steps to minimize the odds of that event happening. This is particularly true if your plan includes some less than “cookie-cutter” provisions, such as unequal distributions between children or grandchildren. One of the keys to reducing this risk of a challenge is communication. If you are leaving uneven distributions, sit down with your family and explain why you crafted the plan as you did. Alternately, you may consider documenting on paper the reasons for your decisions, so that the trustee of your trust or executor of your will has evidence in the event of a legal contest.
Your estate plan is your legacy, so it should reflect your desires and objectives. However, if your loved ones better understand why you made the choices you did, it may help them be more accepting and less likely to go to court.
Another way to minimize the risk of challenge resulting from unequal distributions is to make gifts during your lifetime. If you have a loved one whom you believe deserves or needs a larger share of your wealth, you can make that happen outside your will or trust. Giving gifts to that loved one during your lifetime can offer multiple benefits, as it may allow you to create unequal total distributions while maintaining equal distributions within your will or trust, and it may also offer your some tax benefits, as well.
Additionally, you can use a negative financial motivator to attempt to reduce the chances of a challenge. You may include a “no contest” clause in your plan. This clause is language that says that a beneficiary who undertakes a legal contest to your plan forfeits the right to receive his/her distribution he/she otherwise would have received under your plan. Be aware, though, these clause are not legally enforceable in all states.
Finally, an essential key to minimizing the risk of a court battle is to work with experienced legal professionals. Your experienced estate planning team can give you the advice you need to make sure that your plan is as “contest-proof” as it can be.
Summary: The estate plan you create is your legacy Assurance plan and should reflect the estate planning goals you want to accomplish. Sometimes, a loved one may not agree with your goals and may seek to contest your plan in court after you die. While you cannot erect a plan that is completely “contest-proof”, you can take steps to minimize this risk. Your estate planning legal professional can help you understand your options for reducing this potential hazard.