How to avoid a family feud over an estate

Interview with Chris Ilsley

 
How many times have you heard about a family feud erupting over the spoils of an estate? Once the family figurehead is gone, relationships can break down as the kids squabble over who gets what. Nobody wants this outcome, so how can you avoid it?

• Determine how would you like to be remembered. Don’t allow others to shape your legacy after you’re gone.
• Spend time planning, seeking advice and documenting your wishes.
• Get the support of your spouse or partner in formulating the plan and present a united front to the family.
• Discuss the plan with your family so they understand your objectives and are clear about the outcomes and the reasons for them. Be remembered as the person who looked after everyone they loved and cared about, rather than the person who left them in uncertainty and doubt that blew the family apart.

Transcription

Chris: How many times have you heard about a family feud erupting over the spoils of an estate? If you really want to see a family fight, just wait until somebody has a will. How many times have we talked to our lawyer John Battle about this? How many times has he talked about the problems that people have created for themselves by not preparing a will in such a way that somebody can challenge it? Well, to be honest, all wills can be challenged and as John has said a million times, it’s all about the way that you draw the will. You reduce the potential for somebody to challenge it, and you also reduce the potential for somebody to successfully challenge it if it’s done correctly. Of course there are always going to be, some people are going to have a fight. But I’ll tell you right now, if you ever want to see the worst in a family, what happens when people start brawling over a will, especially if it’s the family figure head who’s just died, relationships can break down because kids have a nice little squabble over who’s going to get the spoils.

Chris: And let’s be honest, nobody wants that outcome, so the big question’s going to be how can it be avoided? We’ve all heard, and John Butler has told us a gazillion times, it doesn’t work— what we call the Frank Sinatra clause—if anyone fights over this will, nobody gets anything. It doesn’t work like that. And you can’t have those sorts of contracts. So what happens is you have to sit down and say, “how am I going to do this? How am I going to plan for this?” And that’s what it’s all about. It’s about a plan. And the other thing I guess you might have to look at adult children and say, a now grown-up Johnny and now grown-up Mary are going to have a fight over this.

Chris: And sometimes there’s a very painful question to ask yourself and the answer is arguably even more painful. So do you want to be remembered as the person who looked after everyone that you loved and cared about rather than be the person who left them with uncertainty and doubt that ultimately believe the family apart? And believe me, families fighting over an estate is something that can literally tear them apart. Michael Grant is a strategic legacy planner for successful business owners. He joins us on the program right now. Michael, this strikes me as the sort of stuff you could literally make a TV series out of.

Michael: Certainly Chris, you’ve seen things played out rather unpleasantly in the media with some fairly well-known families over the past few years. So it’s certainly something that is topical. And as our baby boomer generation moves into the last 30 years of them being around, it’s becoming a bigger and bigger issue as this transition or transfer of wealth from one generation to another gathers pace.

Chris: Oh, there is absolutely no doubt that it can be a problem. And as John Butler has pointed out many times, one of the things that you must do is listen to good quality advice. In some instances, people are given good quality, professional advice, but they choose not to take it. So I guess one of the big challenges for various different professionals who are involved in this estate planning is being able to sit down with people and say “Listen, you need to consider this. You need to understand exactly what the potential ramifications are and how you’re gonna deal with it.” And there are circumstances under which somebody for example might say, “Well, I don’t want to give now grown-up Johnny anything because now grown-up Johnny has been a drug addict for the last 10 years and whatever they get is going to go straight up their arm.” So those kinds of problems and those kinds of issues are very, very real. People have to deal with them. But the trick is to do it right. If you don’t do it right, all you do is create a massive problem. People end up feudin’ and a-fightin’, you end up in court, you end up with a complete stranger making decisions that you, the now deceased would like to have made, not have some judge make.

Michael: That’s right. Taking control and not letting someone else make the decision—probably not one that you would’ve made if you had been there to make it. The thing is that people find this whole issue very difficult to face up to and the longer they leave it, the harder it gets. And I have all respect for the legal fraternity, but at the end of the day, if you end up in court, that’s going to be the worst outcome because boy, you end up paying those who conduct the war very handsomely to conduct it in the way they think best. And the losers are everyone on both sides of the war.

Chris: The big problem you have is when you have two people, three people, four people each with their own perception as to what they believe they are—and I’ll put this in inverted commas—entitled to. And the moment you get somebody who says, “I’m going to go to war,” the scenario that you’re painting turns out. But the trick is how do people discuss this issue and also get the family to such a point where somebody doesn’t feel aggrieved and where there isn’t going to be a battle. Because usually the battles are made by those who come in the future, not by the people who were the original gatherers of the wealth. It’s always the subsequent generations into which the battles form.

Michael: The thing is that perhaps one of the children is in a position where they’re not very good with money. Or they might have a relationship which the family doesn’t necessarily agree with. The thing is that you have to face up to the fact that it is what it is. And if you try to disentitle someone, then all that does is give them grounds—with a smart lawyer—to challenge whatever you try and disentitle them from. So what I’ve found in my experience, the better answer is that you really need to start thinking about this a long time before you pass on, and you need to really come to grips with what is it that you want to achieve in terms of your legacy to your family, and possibly to friends and to other people you care about.

Michael: This could also extend to a community, things like charities and the like, and be very clear in your own mind what you’d like to achieve. But then if you have a spouse or partner, the next challenge for you is to engage the spouse or partner in your idea so that you get their buy-in and support. Because it’s just like, you know, when the kids are little, if you don’t present a United front as parents, then you know, kids are smart—they play a game, play one off against the other and before you know it, they’re getting their way. You’re not getting the outcome you want. So husband and wives, spouses, partners need to be in a position where they are clear on what the outcome should be.

Michael: Then it’s all down to old-fashioned talking. You need to talk to people about why you have come up with the plan or the outcome you have and the reasons behind that. You need to talk people through it, but you need to do better than that. You need to listen to them as well. Get their input and any feedback. If it’s sensible, you may actually alter your plan to take that into account and you do this as an evolutionary process over a period of time. It’s not going to happen in five minutes. This could happen over years, so what you get in a situation where hopefully by the time that you do go, the people that are left behind actually understand what you’ve set out to achieve, accept it and allow it to happen.

Chris: It could be something where you have the wishes of somebody clearly spelled out so there’s no ambiguity. Everybody is absolutely aware of what’s to happen and why, but you get one person who feels aggrieved for whatever reason. We’re talking about adult children in this case, not unheard of. There are examples of that. There are also examples of where you might argue that the circumstances put in place at the time were a little bit ridiculous. One of the classic examples I guess was my uncle and his daughter Olivia who was referred to as his “secret daughter.” Now, forgetting some of the issues that surrounded that there were with her,

Chris: there were conditions attempted to be placed on that will initially—let’s say for example if she, as long as she didn’t join a count or take drugs or something like that. The question is whether or not something like that could logically be put in place. The problem that you then have is if you set out to do something that is in and of itself unreasonable and say for example, you’re not prepared to listen to professional advice. Or if you have a child who is not prepared to accept what they get relative to their siblings, then straightaway you’ve potentially got a problem. And I guess the only question I’m asking here, how can we be absolutely sure that everybody’s on board with it? If you have one child who is not on board with it, don’t you by extension have a problem?

Michael: You avoid the court battle because inevitably that will be the case. You have to engage with that particular person and talk them through. And then it’s almost like a negotiation in some respects, but with the family, it’s the family emotion overlying, so that you get to a position where perhaps reason does actually come to the fore because it was both parties are prepared to compromise at the end of the day. I guess what I’m saying is if you have this conversation over time, you tend to build mutual trust and respect and if you get mutual trust and respect and then people are going to be more accepting of an outcome and if someone is being unreasonable, then really it’s up to the patriarch or matriarch to be able to actually have that conversation, to deal with that unreasonable position whilst they’re able to. Obviously as you get older, your ability to deal with these things is maybe not as good as it was when you were a bit younger.

Chris: What you’re talking about makes a lot of sense, but of course it relies on one thing, and that is communication. Do you believe that we need to address some of the issues surrounding estates within the court system? That perhaps removing the belief and arguably the obligation on people to leave a legacy for their adult children is in order? In other words, do you believe that the law should say that inheritance is a privilege and not a right and nobody, not even those nearest to the deceased have a logical expectation of it?

Michael: Well, that’s a big question. You’re dealing with property and all sorts of legal questions there. That’s turning over or turning back hundreds of years of tradition and I think that would be very hard to change. I don’t think people would actually buy into that sort of change. I think that people do see inheritance as a right and not a privilege. When I talk to people about this, I kind of turn it into that concept of privilege that it is an honor to be part of this family, and it is a privilege to be part of the family and to be actually someone who is consulted on how things are going to end up. When you do it that way, it actually changes people’s perspective and attitude. I’m not saying this as a panacea for everything, but I just take the view that it’s better to talk things out and talk things out early and, and not end up with the very painful, very expensive and ultimately destructive court process where families end up never speaking to each other again.