Communicating details about inheritances could prevent probate issues by avoiding surprises and establishing one’s intentions. Surviving children might feel less inclined to contest a will if they understand that a parent’s wishes match the instructions in the will.
It might make sense in some cases to distribute inheritances disproportionately among children for tax planning purposes. Our estate planning attorneys explain more about this approach in Tax Considerations in Structuring Inheritances. Risk of will contest can be minimized if children know to expect this.
However, informing children of a future inheritance could pose a few issues. For instance, if parents have not created a valid will, North Carolina inheritance laws would apply to direct the distribution of assets; this might be the case if a testator used a do-it-yourself template or, in some instances, where the testator’s will was drafted in another state that does not require the same formalities for executing the will. If there is no will or if the will is not recognized in North Carolina, the assets will be distributed according to intestacy laws. This means even if a parent intends to transfer certain assets to specific children, state law might not match the parent’s wishes.
To help avoid unpleasant surprises when administering the estate, parents can start conversations with children and consider each person’s wishes when making their ultimate decisions. This is also an important conversation to have with adult children if a parent wishes to name a child as executor or an attorney-in-fact on a power of attorney. Discussing one’s wishes with those one plans to name in one’s documents, as well as reviewing the documents with those named, can help to ensure that the individual is prepared to serve in the role if and when it becomes necessary.
Discussions also help to identify other issues, like joint accounts, which could result in unintentional asset transfers. For example, if a parent and an adult daughter have a joint bank account and the parent intends to leave the assets in the account to a son, the account should be re-titled or the assets transferred to a trust to serve this purpose. Otherwise, upon the parent’s death, the joint account immediately becomes property of the adult daughter named on the account.
Reviewing one’s estate planning documents and asset titling with an estate planning attorney can help to ensure that one’s estate will be distributed according to one’s wishes. Learn more about assets that are not distributed according to provisions in a will.
By Attorney Samantha Reichle