San Diego Estate Planning Lawyer Blog
If you have multiple children, preparing your estate plan involves answering a not-so-simple question: How should I divide my estate among them? There may be cases where an equal division of assets is not your wish. You may be estranged from one child, operate a business with another, or simply favor some children over others. In those cases your estate plan can be tailored to reflect the circumstances. Especially if all of your children are adults, there is no legal requirement you treat them equally in your will or trust (or that you provide for them at all).
But even if you decide all of your children should inherit equally, that’s not the end of the matter. An “equal” division of assets may sound simple on paper, but in practice that can prove difficult, particularly when your estate includes a large number of non-liquid assets like real estate. It’s important your estate plan contemplates these execution issues, because failure to do so can lead to time-consuming and costly litigation between your children.
Four Executors, No Easy Resolution
A recent case from the State of Georgia illustrates the pitfalls of a poorly conceived estate plan. O.C. Hubert and his wife, Ruth Swann Hubert, left a substantial estate for their four children. The Huberts prepared a detailed estate planning involving various trusts. Mr. Hubert died in 1986; Mrs. Hubert lived another 20 years.
Mrs. Hubert’s last will and testament named all four children as co-executors and expressly stated they were to “equalize” the distributions from her and her husband’s estates. As you might expect, the children couldn’t come to an agreement on how to accomplish this. Eventually, a judge came in to mediate between the four and produced a settlement agreement. Litigation then ensued over how to enforce the settlement.
A Georgia probate judge ultimately made that determination, and in the process he removed all four children as co-executors, citing the “eminent distrust” among them. The Georgia Court of Appeals affirmed that decision. The appeals court, however, rebuked the probate judge for taking it upon herself to depart from the terms of the settlement agreement. The agreement called for an independent accountant to audit the estate’s books. The judge was then supposed to resolve any “open issues” identified by the audit before returning the matter to the accountant, who would then perform the final calculations to equalize the distributions to the children. Instead, the judge performed the calculations herself. While the appeals court sympathized with the lower court judge’s desire to “bring an end to this protracted litigation between family members,” the terms of the settlement had to be honored.
Avoiding Disputes Before They Arise
The best way to avoid such protracted litigation is through careful estate planning. Two key lessons from the Hubert case are (1) be wary of appointing multiple executors and (2) always specify a procedure for distributing the estate and/or resolving disputes. In a situation where you plan to leave substantial assets to multiple children, it may be advisable to appoint a non-family member-or even a professional fiduciary-as your executor or trustee. As always, the first step should always be to engage an experienced California estate planning attorney who can present you with all of your options. Contact the Law Office of Scott C. Soady in San Diego today if you have any questions.