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Legalities Are not Enough: Family Dynamics and Estate Planning

My Aunt Jane called recently to discuss a situation that she recognizes as a problem in the making. She has two adult children, Patrick and Ann. Patrick was going through some rough times when he moved back into the family home following the death of his father (Jane’s husband) ten years ago. Since then, his two grown sons came to live there as well.

Patrick and his sons are in the construction and home remodeling business. They’ve done well at times, but they can’t seem to put together twelve good months in a row. Meanwhile, they’ve kept the house in good repair and made some additions, but they have paid rent only sporadically. The house represents Aunt Jane’s entire estate, which her will directs is to be divided equally between Patrick and Ann. The house will clearly have to be sold, and everyone knows that Patrick can’t afford to buy out his sister.

Aunt Jane’s health has begun to fail over the past few months, but Patrick seems unaware that he might ever have to find another place to live. Ann’s husband recently died of cancer, however, leaving her a forty-five-year-old widow with three kids. Ann is surviving somehow, but when her mother dies, she will desperately need her half of the estate.

Foreseeing conflict, Aunt Jane called to ask if there was something she could “put in writing” to resolve this problem.

“Yes,” I told her. “It’s called a will, and the one we did last year is crystal clear. You don’t need to do any more writing; you need to sit down with Ann and Patrick and do some talking.” Whether brother and sister talk about this before or after their mother’s death, Patrick will surely point to the value his improvements have added to the property, while Ann might focus on her brother’s years of rent-free residence there.

At my strong suggestion, Aunt Jane chose Ann as the sole executor, abandoning her earlier idea to name the two children as co-executors. When her mother dies, Ann will therefore have the legal authority to decide how to value (if at all) Patrick’s claim that he should be compensated for increasing the value of the house. She will have the power to determine a selling price for the house—and to start charging Patrick a fair rent until it’s sold. As landlord, executor Ann will also have the right to evict her tenant/brother if he fails to pay.

That’s about all “something in writing” can do in this situation, but that’s not what Aunt Jane wants. She wants her children to remain close to each other. What’s needed here is family communication, not more legal documents.

From “AARP Crash Course in Estate Planning: The Essential Guide to Wills, Trusts and Your Personal Legacy,” by Michael T. Palermo, JD, CFP, 2005, pp. 100-102.

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