The Insanity of Inheritance: How to Keep Your Clients Civil and Practical

When you handle inheritance issues for bereaved clients, stop and put yourself in their shoes. Try to understand their emotions…loneliness, sadness, fear and possibly anger.

As a CPA financial planner, your role is to support your clients throughout their lives, including during the loss of a loved one. When it comes to inheritance, people’s judgment can become clouded. Even if dealing with an inheritance brings out the worst in your clients, you are helping them prepare for a secure retirement. Take a deep dive into their lives and look for an understanding of what they’re going through.

When clients lose a parent, they also lose their security blanket, leading them to cling to possessions that remind them of their loved one, such as a silver set, a gun collection or a folded veteran flag from military service. While these are all reminders of loved ones, lasting security really comes down to financial stability. Consider these three factors:

Favoritism. As financial advisers, you must try to help your clients eliminate favoritism when deciding who gets which assets. Help your clients create an environment where their family is not going to be at each other’s throats. You can suggest leaving equal amounts to children and appointing fiduciary responsibilities – trustee, personal representative and powers of attorney – on a logically, supportable basis, such as starting with the oldest, the child who is closest geographically or whatever arrangement makes most sense for your client’s family.

Family rivalries. In my experience, the majority of inheritance disputes involve stepchildren and stepparents, but in the United States, unlike most other countries, a person has no legal obligation to leave any family members an inheritance. In fact, it is entirely discretionary. As a result, family members may fight among themselves and vie for the most attention to receive a larger portion of the inheritance. Nevertheless, it’s important for the financial planner to help protect the children and the spouse, such as encouraging clients to make their wishes known in advance or appropriate use of trusts. Estate planning is about balancing the needs of these two groups and creating estate plans that do not pit one against the other.

Financial elder abuse. When we think about elder abuse, we think about the door-to-door salesmen or an Internet scam, but the vast majority of financial elder abuse is perpetrated by families. Unfortunately, elder abuse often goes unreported, so a definitive percentage of exactly how much elder abuse is caused by families is unavailable.

There are many scenarios that lead to elder abuse, but one, in particular, occurs when family members feels they will not receive an inheritance. As a result, radical behavior can ensue. They may offer to move into the house and take care of an ailing parent, when in reality, the objective is to take advantage of the parent’s physical or mental health to benefit monetarily. In essence, family members who do this are trying to change history in their favor, going on a preemptive strike to ensure they get their fair share, and feel justified in doing so.

This scenario can create conflict in the family. Greed and fear frequently take over and family members can drift further apart, fighting for their part in the will. If you can get feuding family members to understand that fighting is not the solution and is ruining their parents’ legacy, you will do a lot of good.

Encourage Equality and Fairness

Parents need to invest the time to thoughtfully prepare a will and trust to preserve the special relationship they have with family members, as well as the relationship family members will have with each other in the future. Equality and fairness are key ingredients.

More information on estate planning can be found on the PFP Section website. Members of the PFP Section can listen to a rebroadcast of Mark Accettura’s 2015 Advanced PFP Conference session on this topic. Section members also have access to other estate planning webcasts in the PFP Learning Library and the four volume set, The CPA’s Guide to Financial and Estate Planning.

Mark Accettura, Elder Law Attorney. Mark specializes in the areas of elder law, estate planning, estate and trust administration, Medicaid planning, Aid and Attendance Veteran’s planning, and family inheritance dispute resolution. Mark is a frequent lecturer on estate planning topics and is an author of four books. His book, Blood & Money: Why Families Fight Over Inheritance and What To Do About It, addresses this topic in more depth. Contact Mark through his website, www.elderlawmi.com.

The Insanity of Inheritance: How to Keep Your Clients Civil and Practical

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