Planning a conflict-free trust or estate plan

The last thing that people want to think about when they’re planning an estate or trust is worrying about conflict. When assets or properties are being distributed among family members there are many cases where conflict can take place over the remaining inheritance. If you’re looking to reduce the conflict in order to ensure that your inheritors receive their fair share, there are a few things that you can choose to do:

Establish a living trust 

In cases where you don’t have to worry about current beneficiaries and remainder beneficiaries, you can establish a living trust. A living trust is a process where you will transfer all of your properties into a trust property. This means that the property kept in “trust” will be able to be transferred fluidly in the event of death. It also means that it won’t need to go through the probate process. Trust properties are changed privately and will give you a sense of confidentiality and peace of mind. 

However, in cases where there is a current beneficiary (such as a wife) and remainder beneficiaries (children of another marriage), a living trust can generate a conflict of interest. This is because the current beneficiary may want to acquire as much of the estate as possible, thankfully there are ways to circumvent this.

Develop a unitrust 

In cases where you have two beneficiaries and one consists of children from a previous marriage, you may want to look into using a unitrust to avoid conflicts of interest. In these scenarios, percentage savings are distributed to the current beneficiary according to the fair market value. The remainder beneficiary would be the future inheritors of the trust, or in our example the children from a previous marriage. According to this website, if the trust principal is limited one year, the current beneficiaries may sell assets in order to make up the difference. Both beneficiaries benefit from the appreciation of the trust, and it works to reduce the amount of conflict of interest in these cases. The trustee is also able to invest the trust in order to appreciate its value. 

Drafting a will 

The single best thing that you can do to prevent any conflict of interest with an inherited amount is to draft a will. A will ensures that there won’t be any guessing about where you would like your assets to go. If you do not draft a will, assets may go through the probate process and these differ based on the state that you live in. This means that your assets may not be distributed to persons you want to look after in the case of death.

A will also allow you to select a trustworthy executor who will be responsible for following through with the will’s desires. In cases where there is no will, an executor will be appointed by the state. Likely, you do not want this responsibility to fall on the shoulders of someone who did not anticipate this job.  

Assigning a power of attorney

Assigning a power of attorney means that if you are ever unable to make decisions about the estate yourself, they will be able to make these decisions for you. They can monitor your estate in these events, or you can appoint a successor trustee in order to take on this responsibility. Being able to select your own power of attorney gives you autonomy over who you choose to manage your assets. In cases where you have not selected power of attorney, one will be selected for you, and these may vary based on local state laws. It is best to have a plan of action ahead of time in order to avoid this. When you have the state appointing a power of attorney for you, it increases the instances where conflict of interest might take place. 

If you are looking for professional advice on setting up a trust or an estate plan you should talk to an expert such as a trust or estate lawyer. You will also want to enlist the services of a notary in the event where you require a professional signature on a will. Both a unitrust and a living trust can serve their purpose depending on the scenario. You should definitely be appointing a power of attorney that you trust to make your financial and property distribution decisions. With a bit of research, you will be able to create a conflict-free trust or estate plan and rest peacefully knowing that everyone will get their fair share.