The biggest hurdle to seeing a windfall from your rich grandfather isn't the possible 40% estate tax. It's your own relatives, according to CNBC in the recent article, “Say hello to the No. 1 threat to your $11 million inheritance.”
A recent TD Wealth survey found that 44% of attorneys, trust officers, and accountants cited family conflicts as the biggest threat to estate planning. The company surveyed 109 estate planning professionals in January at the 52nd Annual Heckerling Institute on Estate Planning in Orlando, Florida.
Modern families create more estate planning complications, because there are more blended families, multiple ex-spouses, children from prior marriages and situations where one spouse is significantly younger than the other.
There are several ideas you should consider to maintain the peace between family members, while making certain your loved ones receive what you intended. The only way to make sure your assets are divided the way you want, is to draft an estate plan and don’t forget to make sure that the beneficiary designations on accounts are correct. Those who die intestate (without a will), leave everything up to a probate judge in their home state.
Business owners also need planning. It’s common for a married couple to operate a family business that comprises most of their wealth. In many cases, one of their adult children is actively involved in that business, but the others aren't. When this happens, business owners can buy life insurance to help make the two less-involved children whole, or they could give them a non-managing interest in the company.
You should also discuss your estate plan with your family and explain your rationale and reasoning. Review your estate plan with your attorney, especially since the Tax Cuts and Jobs Act increased the estate tax exemption to $11.2 million per person. In addition, a few life events might trigger a review of your estate plan: new tax legislation and a change in your family situation, such as a birth, a death, a marriage, or a divorce.
Reference: CNBC (April 11, 2018) “Say hello to the No. 1 threat to your $11 million inheritance”