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Advance Directives to Preserve Family Harmony

Most people we work with understand the importance of estate planning and preserving assets. But many overlook their most valued asset: family harmony. Keeping that in mind, there are certain options you may consider when planning your advance directives and/or estate to foster a more harmonious administration of your estate and forestall potentially contentious situations:

The power of attorney authorizes your agent to make financial decisions on your behalf. You may consider naming more than one child as your agent, or even name other children as successor agents. Sometimes knowing they have joint authority or even the potential to act as an agent in the future will make them feel valued and acknowledged. It’s also possible to make the non-agent children monitors with the authority to oversee the acts of your agent. Another modification sometimes added to a POA is naming your agent to serve as your guardian, should that be required in the future. While this may not be entirely binding, it does express your wishes and may help guide the court if two or more of your children are fighting over this.

The health care proxy allows your agent to make health care decisions for you if/when you are unable to do so on your own. Unlike the POA, you can only have one agent at a time. One recommendation is to name your other children as successor agents – knowing they are next in line to act can help alleviate their feelings of being left out. Additionally, a separate living will can guide your agent on medical and/or end of life decisions. Seeing your wishes and desires written out can lessen in-fighting among children, as they do not have to speculate as to what you would want; this is particularly important should your child ever need to make the decision to end life-sustaining care. You may also consider separate HIPAA authorizations, so each child has access to your medical records and can stay in the loop with your health care providers.

The family dynamic often changes – sometimes drastically – after a parent passes away. Children can feel lost and may not know what you would have wanted. Questions arise. Did mom want to be buried or cremated? Did dad want a wake? An open or closed casket? And the list goes on. To help keep family harmony, consider drafting a document that appoints an agent to control the disposition of your remains. A planning technique to consider is a pre-paid burial contract, enabling you to plan your funeral ahead of time – putting less pressure on the surviving family members.

Another cause for strife is gifting made during your lifetime. What you may deem to be a gift, the non-receiving children may consider an advance of the gift receiver’s inheritance. Memorializing a gift in writing is one way of showing your intent that a gift was a gift and not an advance of one’s inheritance. Additionally, if you make a gift above the federal gift tax limit (currently $15,000 per individual per year), you are required to file IRS Form 709, which helps evidence that the gift was in fact a gift.

Often, the most contentious aspect of estate planning is the will or trust which distributes your property upon your passing. Selecting one child to act as executor or trustee can cause animosity, and you may want to think about having co-executors and/or co-trustees to serve as fiduciaries. For many, it’s a good idea to put in place specific bequests with regard to personal property such as jewelry, family heirlooms, photographs, art work, collections, etc.

Lastly, pay attention to your jointly-owned bank and other financial accounts. It is quite common for a parent to leave their assets in equal shares to their children; however, if you have financial accounts jointly owned with a child, or have a child listed as a beneficiary of an account, this can cause a disproportionate distribution of your overall property. Joint accounts and accounts with named beneficiaries generally pass outside of the will, and thus are not included in the equal distributions via a will.

While it’s essential to have your estate planning documents in place, additional planning can be done to minimize family tensions and disagreements, and ensure that your wishes and desires are carried out.