The Golden Window of Opportunity: When to Successfully Address Estates Conflicts
Edited by Judith Stalk and Brett Fisher
In almost 20 Estate Conflict Management workshops which I have conducted throughout California, attorneys estimate the financial cost per party in estate litigation at anywhere from $10,000 to $150,000, and at times astonishingly higher. An additional consequence of estates litigation can be destruction of the family. There are great potential benefits for all the usual estate litigation players who address conflicts issues during the estate planning process. And there are also considerable risks and life disrupting consequences if these conflicts are not resolved at that time. The alternative to ignoring these conflicts during the estate planning process or letting them drift toward estate litigation is to address the conflicts post mortem before litigation begins. There is a golden window of opportunity during which familial disaster might be averted.
Benefits of Discussing Conflicts Post-Mortem
Conditions change over time. One attorney at an Estate Conflict Management workshop commented, “From the time of the estate planning process until the testator’s death, conditions may change and conflicts that existed during the estate planning process may go away.”2 This attorney’s sentiments were echoed by attorneys and other estate planners at perhaps two-thirds of the workshops around California. “People grow up over time and problems go away.”3 The best case scenario is a potential contesting party may pre-decease the testator. This might be wishful thinking.
Some testator’s prefer to keep a lid on the conflict. The testator is not obligated to deal with conflicts during the estate planning process. Many, if not most, attorneys and other estate planners report that their clients are usually conflict adverse and don’t like to face the conflicts in their lives, especially when the client is elderly. Many say “Let my children deal with it.” A Long Beach attorney commented that his client may prefer to maintain the little relationship he has with his son rather than attempt to face a conflict during his lifetime that may only widen the gulf between them. Such a client may also fear never having a relationship with his grandchildren.
Disadvantages of Discussing Conflicts Post-Mortem
“The more issues, the more complicated the issues, the more there is at stake, the greater the benefit of attempting to resolve these issues soon after death and before estate litigation. There is really little to lose.”4 There are important exceptions. When there is a family business without a succession plan, the business may fail in the next generation and is not likely to survive the generation after that. At stake is the future of the family business, generations of relationships and the potential to positively impact sibling animosity. Another exception might be when there is a divorce and remarriage with step relationships. Other exceptions include when heirs might be jointly owning estate property, or if there is family owned vacation home and this forces heirs into joint ownership when it may not be welcome. These issues are best addressed during the estate planning process.
When Post-mortem Is the Preferred Timing for Such a Discussion?
There is a golden window of opportunity to address conflicts post mortem, the period after death when family are able to talk about issues and before the statutory deadline for filing a contest, 120 days after death. This golden window of opportunity appears when the fog of grief begins to lift. However, dynamics may be more complicated.
Some conflicts arise during the final illness, possibly at the hospital bedside concerning funeral arrangements. “That’s when things deteriorate.”5 “Some people call their attorney before they call the coroner.”6 To say emotions run high is a mild understatement. Grief is a pervasive emotion which impacts almost all decision making at this time. Coupled with grief are denial and anger. Rational discussion and decision making at such times becomes an almost insurmountable challenge. If you’ve been there, you know.
When, if at all, is a good time for the “reading of the will” or more likely the trust? A Santa Rosa attorney suggests it may be convenient to do so while some family are in town from around the country as an effort to include them in the process. Almost universally across California, attorneys and other estate planners caution not to have such an event too soon after the funeral, if at all. Emotions are running too high. “While most might be grieving, others may be celebrating. Everybody has allegations in their head and nobody can prove them. Nobody has the power to resolve issues at that point in time. Was Dad really competent when he signed the 5th amendment to the trust? Who influenced him to cut me out?”7 “Right after the funeral if there is a meeting without attorneys the gloves come off and that’s when World War III starts.”8 “Isn’t someone usually murdered at that meeting?”9 “My mom just died and my sister is now doing [the nastiest things]. She was born when I was three and she ruined my life.”10 The attorney commented this is now 57 years later. Another attorney suggests there should be a product you can get at a pharmacy that you put on your forehead, a little strip, so that when it’s no longer pink, it’s ok to talk with them.
A majority of attorneys avoid a reading of the will or trust. Such a “reading” in California may not happen among some attorneys. There is statutory requirement on the part of the trustee, and attorney for the trustee, to not disclose the content of the trust. California statute also requires trustees to periodically report to beneficiaries the financial condition of the trust. This creates a tremendous tension for those attorneys who believe providing information early on may reduce risk of conflict. “This helps manage expectations and reduces surprises and prevent litigation. The best solution is for the trust or estate administration to be as transparent as possible. Take the position that the fiduciary duty of the trustee is be transparent and that this is a virtue and not a vice. That is until the time the trustee has embezzled $20,000,000. Ninety percent of the time the trustee is a family member and being opaque is grounds for paranoia for family beneficiaries.”11
Attorneys from around the state talk about the need for family to get over grief before they can deal with issues. Though grief is an issue, the grieving process can take some time, for some people a year or much longer. Some issues can’t wait that long. There are the compound emotions of grief, anger, guilt, frustration, loss and others. Perhaps the golden window of opportunity opens when the initial shock wears off. Discussions any sooner may not be fruitful. Attorneys often relate that they have long conversations with the surviving spouse, discussions which include listening to the grieving spouse and then some legal business discussion. A week later the surviving spouse has no recollection of the first conversation.
The golden window of opportunity provides the critical elements for potential resolution: a desire to resolve issues early and a compelling desire for distribution. What gets in the way, unfortunately, is the toxic and highly volatile combination of grief, greed, lack of sufficient flexibility, anger developed during life long familial relationships, and the desire to carry out what each family member fervently believes is Dad’s last wishes. “It’s not going to work unless everyone is willing to give something up to find resolution. Economics suggest it is very beneficial to give up something to avoid litigation and save a lot of money.”12 This is why the window of opportunity is golden. It is a precious moment and you don’t want to lose it.
However if there is the right positive balance post mortem, great things happen, such as resolution and avoiding destruction of the family. In a recent mediation of a dispute between adult children and their step-mother, the children sued alleging inappropriate use of funds from the father’s trust. The step-mother was highly motivated to resolve this dispute, filed several months after her husband died. With permission of her attorney I can relate to you the step mother’s motivations. “I don’t want the poltergeist of this terrible dispute hanging over my head until I die.”
What are the messages?
The best potential alternative to estates litigation for families who do not wish to attempt to address conflicts during the estate planning process may be to address those conflicts post mortem, at a time when the players are able to deal productively with those issues, and before estates litigation commences.
Estate conflicts are a pervasive phenomenon, even among estate planning and estates litigation professionals. At Estate Conflict Management workshops I ask the question, “How many of you have experienced a family conflict following the death of a family member, or expect to have such a conflict in the future?” At the most recent workshop 50% raised their hands. Estate conflicts will likely impact a large number of readers of this article. It’s time to change the culture of how these conflicts are resolved.
Next: Chapter 7 compares addressing conflicts during the estate planning process, post mortem and traditional estates and probate litigation, and the impact on the testator, heirs, disinherited / potentially contesting parties, trustee and the estate planning or estate litigation attorney who represent them. The bottom line: where’s the benefit for the estate planning and estate litigation attorney?
For previous chapters see the following:
Chapter one in this series, “Conflict Management in Family Inheritance Wars“. In a contested matter emotions can run incredibly high. Families leave the probate/estates litigation process exhausted and embittered. Managing estate conflict – both existing and potential conflicts – presents the possibility to deliver much more financial and emotional value to clients, provide higher client satisfaction, and higher personal satisfaction and more client referrals to the practitioner.
Chapter two, “There Has To Be A Better Way: The Value of Managing Estates Conflicts“. The financial cost per party in estate litigation can be from $10,000 to $125,000 and at times astonishingly higher. Estate planning and litigation attorneys describe the emotional and financial devastation to the parties involved.
Chapter three, “Is There More To Life Than Death, Taxes and Post Mortem Financial and Emotional Grief?“. Testator’s benefits of addressing potential conflicts during the estate planning process. Estate planner’s possible ethical responsibilities to the testator regarding potential conflicts that may arise after the client’s death.
Chapter four, “Benefits of Addressing Conflicts During the Estate Planning Process“. To heirs, trustees and attorneys, and the benefits when there is a family business or divorce and remarriage.
Chapter five, “Is Addressing Potential Conflicts During the Estate Planning Process a Pre-emptive Strike or a Can of Menacing Worms?” What are the possible consequences if during the estate planning process a testator attempts to address conflicts that could arise after his death but does not succeed in finding a solution? How do unsuccessful attempts to address these potential conflicts impact the testator?
- 1. Copyright 2009 by Paul Fisher
- 2. An attorney at the Estate Conflict Management workshop for the Riverside County Bar Association.
- 3. An attorney at the Estate Conflict Management workshop for San Fernando Valley Estate Planning Council.
- 4. An attorney at the Estate Conflict Management workshop for the San Diego County Bar Association.
- 5. An attorney at the Estate Conflict Management workshop for the San Bernardino Estate Planning Council.
- 6. An attorney at the Estate Conflict Management workshop for the San Mateo County Bar Association.
- 7. An attorney at the Estate Conflict Management workshop for the South Bay Legal Consortium.
- 8. An attorney at the Estate Conflict Management workshop for the San Bernardino Estate Planning Council.
- 9. An attorney at the Estate Conflict Management workshop for the Redwood Empire Estate Planning Council.
- 10. An attorney at the Estate Conflict Management workshop for the Alameda County Bar Association.
- 11. Very highly regarded Century City, California, attorney.
- 12. An attorney at the Estate Conflict Management workshop for the San Mateo County Bar Association.