One of the most unpleasant things that we can imagine happening when we pass away, is our family fighting with each other over who gets what. This is especially true if you know that your estate documents do, or will, leave a family member with less than what he or she expects to receive.
How can you minimize the chances of having a contested estate when you are gone? There are some things you can do, some of them which are legal, and some of which are just plain common sense.
One of the best ways to avoid a contested estate is to use a living trust. A living trust is created while you are alive, and thus, your family members know right away what they will and will not receive. Additionally, a living trust does not go through the court probate process when you pass, thus avoiding the possibility of disputes and contests.
Life Insurance and Bank Accounts
Life insurance can also help you avoid a contested estate because life insurance automatically transfers to whatever beneficiary is designated in the policy. The transfer happens outside of probate. Because of this, there is no court proceeding associated with the transfer, and thus no opportunity for a family to challenge who gets the distribution.
Similar to life insurance, payable on death accounts are set up by banks and financial institutions and will pay out the balance in the account to whoever the designee on the account is. The payment is made outside of probate, so there is no opportunity for family members to contest what they are receiving.
Of course, it is important to update your beneficiaries, so that they reflect where you want your benefits to go, as your life situation may change through time.
Using a No-Contest Clause
You can also include what is known as a no-contest clause in your estate documents. This is a clause that says that if someone contests what they are getting in your estate documents, and they lose, they will receive nothing. This can be a huge deterrent to people who are seeking to challenge your estate documents. Although, it can be a harsh penalty to the person if their challenge is unsuccessful.
Act Early in Creating an Estate Plan
Acting early on your estate plan can be helpful, because one way that disgruntled family members often challenge estate plans is by saying that you were incapacitated or not mentally capable, at the time the state documents were made. The younger you are and the healthier you are when the estate plan is drafted, the less likely that kind of challenge will ever happen.
Additionally, while you are younger and of sound mind and body, you can address concerns of family members who may be upset as to what is or is not left to them in your estate.
Like most things in life, communication is key. Discussing why family members are getting what they are getting, and why, can curtail challenges later on down the road.
Call the Lincolnshire contested estate attorney at Orlowsky & Wilson, Ltd at 847-325-5559 to learn more about creating an estate plan that works for you.