More Than Money
Issue #32

Passing the Torch: The Great Wealth Transfer

Table of Contents

“Avoiding the Family Fight”

An Interview with Les Kotzer

Interviewed by Mara Peluso

MTM: Are you ever surprised by the emotions that are stirred up by the subject of estate planning?

Kotzer: Throughout my years of practice as a wills and estates lawyer, I have been shocked to observe how often the word "hate" comes up when families are dealing with their inheritances, as in, "I hate my brother," or "I hate my dad." My clients are expressing "hatred" toward the parents who raised them and toward their own brothers and sisters. These are the people we grew up with, the kids who played football with us in the backyard and rode to the Grand Canyon with us in the back of the station wagon. Now these "children" are 45 and hating each other to the point where they won't even be in the same room together.

MTM: Why is this happening?

Kotzer: : Because parents and kids are turning a blind eye to planning. Often the parents themselves are destroying their own families without even knowing it, by not planning now. The book I co-authored with Barry Fish, The Family Fight: Planning to Avoid It , is not about how to save taxes—it's about how to save families. We need to pay attention to this issue, because we have the potential to avoid the "family fight."

MTM: You say it is a growing trend that more and more people are fighting over inheritances. Why is that?

Kotzer: : In my practice, I have seen a trend among baby boomers, who are about to have trillions coming down to them from Depression-era parents. Baby boomers, in general, were brought up to expect the best of everything. The baby boomer generation spends quite a bit—and they lost quite a bit when the market "crashed." Until the stock market slowed down, baby boomers thought they would retire early on their investments, which had been increasing every day. Now, lots of people are afraid to open their retirement savings statements because their holdings have dwindled. The baby boomer generation (which is my generation) also has a lot of debt. Many of us are even being laid off, and it's very hard to find work at age 55.
Our parents, on the other hand, protected their money. They didn't go to restaurants as often as we do, they kept their cars longer, they clipped coupons and saved every penny. Therefore, baby boomers are telling me, "I may not have lots of money now, but I will in the future because Mom and Dad have this and that." Many baby boomers are depending on their parents' homes as a mattress of protection. Because many children feel entitled to their parents' estate, they fight when their parents don't handle their estate as the children believe they should.

MTM: And what happens then?

Kotzer: : Because of these generational dynamics, the concept of "waiters" is becoming an increasingly common phenomenon in our practice. Once I had a client arrive in a beautiful sports car, wearing a suit that glowed in the daylight, with jewelry dripping off his arm. I said to him, "Let's talk about what you own." He said, "Well, my car is leased, I have a mortgage on my house"¦" His wife jumped in and said, "My husband is a waiter." I was taken aback, wondering what kind of restaurant he was working in to afford him this type of lifestyle. Then it hit me: His wife meant that he was "waiting" for his inheritance. I smiled, but the phrase hit a nerve.
Since this incident, I have talked with many other people who are in the same situation. Rather than investing or saving money, some of my clients are entirely dependent on inheriting their parents' money. I even spoke with a man who calls his brother a "wisher." His brother was not only waiting for his parents to pass on, but was wishing that his parents would pass away sooner.

MTM: You said that parents are "destroying their own families without even knowing it." What are the main mistakes parents make in their estate planning that contribute to the family fight? How can parents avoid making them?

Kotzer: : The most common mistakes parents make include:

Failure to plan for the event of your incapacity
Lots of parents don't understand that their will does nothing while they are alive. With parents living longer, fighting often occurs when a parent becomes incapacitated. If you were to become incapacitated, who would take care of you? Who would do your banking or make your investments if you had a stroke or were in a car accident? The executor of your will has no power to act for you while you are sick, so your assets could be frozen.

Solution: Parents can avoid this problem by appointing someone as durable power of attorney for property. This enables someone you trust to step in and make financial decisions in case you can't make them yourself. In many states, you can also write a living will and appoint someone with the durable power of attorney for health care.

Failure to include provisions for your possessions in the estate plan
Parents assume that children will not fight if their money is divided up evenly, but children do not fight over just money. Kids fight over memories. Even if you leave more to the child who needs it the most, your other child or children might be really hurt. I have witnessed awful fights over Mom's personal possessions. In one case, a daughter wanted to keep a vase that she had given to her mother as a birthday present. Her brother, who was executor of the will, was demanding that she return the vase to the estate. I had to tell her that she was obligated to return it. Rather than share the vase with her siblings, however, the daughter smashed the vase in the parking lot of my office.

Solution: You need a plan for how to deal with your personal items. The Family Fight: Planning to Avoid It discusses in detail how to deal with personal possessions.

Failure to inform your children whom you have named as power of attorney and/or executor, and why Children fight over being slighted. They fight over who was appointed as executor or as power of attorney. In the book, we talk about one woman who learned that she was the power of attorney, but was already feeling overwhelmed by her own responsibilities, so she asked her sister to help her handle the estate. The sister refused, saying, "Mom wants you to do it. She must have loved you more."

Solution: Have a conversation with your children to explain your choice of executor.

On Waiting"¦
Loving My Dad, Not My Inheritance

I always had the idea that I could afford to be a flake. I could afford to get thrown out of Harvard and be wild because one of these days I was going to inherit a lot of money. Then one day when I was in India, my spiritual teacher called me in and said, "Your father has a lot of money"¦You are not to accept an inheritance." I was startled. I said, "Okay," while thinking to myself, "I'll deal with that when the time comes."
At the time, I didn't know whether I would honor what my guru said or not. I thought that coming from a family of lawyers I'd figure a way around it. Yet, on a spiritual level the mandate felt right to me. I knew that my father saw everybody as wanting his money and I didn't want to be one of those people. It would mean that he wouldn't trust my love. Ultimately, I set up a special account for any future inheritance with the intention that every penny would be given away.
Once I shifted my intention towards my inheritance, the effect was profound. My lifestyle was no longer impeded by my father continuing to live. I hadn't been aware that I was wanting his money and waiting for him to die. Now that I stopped doing so, suddenly I was helping him remarry. He and his wife and I became close buddies. I just wanted him to be happy; he had worked hard, I wanted him to enjoy spending his money. While I never spoke to him about my intention, once I stopped wanting his money, I was freed up to love him—and he recognized that.
—Ram Dass
Excerpted and adapted from an interview in We Gave Away a Fortune by Anne Slepian and Christopher Mogil, with Peter Woodrow (New Society Publishers, 1992). Available at www.morethanmoney.org .
Failure to appropriately thank the care-giving child
Some children wait in the hospital day after day, or even give up their job or education to take care of their parents. Their siblings, however, may live far away and never even see the sick parent. One woman I know of was a caregiver who felt slighted. After years of living in her sick mother's house to take care of her, the woman's brother was named executor of the estate. When the mother died, he threw his sister out of their mother's house. How does a parent deal with that? Does a parent give equally even though one child gave up part of his or her life to help out the parent?

Solution: One suggestion is that parents discuss this issue and decide how to benefit the care-giving child while the parent is still alive.

Failure to disclose information about your will to your children
Parents and children both contribute to the problem of secrecy. Parents are often secretive about their wills, and often, adult children cannot convince their parents to disclose any information about their wills. Sometimes a child doesn't know he or she is appointed as executor until after the parent dies. On the other hand, many children do not want to think about their parents becoming sick or dying and so they refuse to talk about it.

Solution: Communication is essential because death is inevitable. Careful estate planning designed to avoid family fighting, along with conversations with your children about your will, can do a lot to prevent these problems. One way to get the conversation started is to use our book as a bridge of communication. Parents often ask us to send the book to their kids and vice versa.

Failure to re-examine your will after getting remarried
Parents often fail to consider the issue of second marriages. I spoke with a man whose father had a great deal of wealth and property, which he had inherited from his own father. The man's father remarried, and the man was very close with his stepfamily. The stepmother, who was executor and sole beneficiary of the father's will, promised that she would "take care of the son." When she passed away, however, she willed everything to her own children—including all of the money and possessions that her husband had worked for his entire life, as well as everything he had inherited from his own family. The son said he was not as upset by the loss of the money as he was by being forbidden to even see his family's old photographs or to visit his father's old home.

Solution: If your parent is in a second marriage, he or she must talk to a lawyer about his or her will.

MTM: Is there anything else you would say to parents to help keep their children from fighting?

Kotzer: : A lot of people think they are protected from family fights because they have a will and a safety deposit box. But many may be in for a rude awakening, because their children can still have devastating disputes. Parents must use caution not to base their planning on inappropriate (albeit natural) assumptions, which often lead to family fights.

Dangerous Assumptions

To avoid family fights over your estate, be careful what you assume!
Never assume goodwill among your children
Never assume that because you love your kids, they'll love each other. If you have one child with debt and another without debt, don't assume one will look after the other. The pressures put on your daughter to take care of your son with debt, for example, could hurt their relationship, or could hurt your daughter's marriage.

Never assume that your child's marriage will be permanent.
In some cases, it may be prudent not to appoint your son and his wife as executors of your will. If you appoint your son and daughter-in-law as executors and then your son should die, your daughter-in-law would still be your executor. It's generally wiser to appoint your son and another of his siblings instead.

Never assume that a "homemade will" will be effective
Because of online will-making programs, there has been an explosion of the homemade will. Regardless of how much money you have, it is worth going to a lawyer and having documents prepared for you. I have heard too many horror stories. People think it's easy to do a will on their computers, but a lot of variations and issues come up in preparing a will. For example, if you own something in joint names with "right of survivorship" with one of your children, like a bank account, your will can't divide the account among all of your children. "Joint survivorship" means that your child who is named as "joint" on the bank account with you gets that bank account and has the right to decide what to do with the money. The same thing goes with land held jointly with right of survivorship. The point is that the surviving joint account holder gets the money (or the land) no matter what the will says.

Never assume that your lawyer is capable of finding all of your assets
A lot of people come to me, dump documents on my desk, and think I can find every asset. Sometimes parents have not organized their affairs and assets get misplaced or are never found. Get a detailed checklist (our book has one and there are others) so you can identify all of your assets. Then tell the children where to find the list.
—Les Kotzer

Les Kotzer is a wills and estates attorney whose area of expertise is on families fighting over inheritances. He is the co-author of The Family Fight: Planning to Avoid It (Continental Atlantic Publications, Inc., 2002). Kotzer has been featured in Time Magazine , the Associated Press, United Press International, and on radio and television shows across North America.


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