While you, like most parents, probably have high hopes that your death will not prompt sibling disputes over assets, the truth is that such disputes are common. Unfortunately, such disputes often end up in costly and lengthy legal battles.
The good news is that, with a bit of forethought, you can help your children avoid such disputes. Investopedia details a few estate planning steps parents should take before their time comes.
Have a will or trust
The best thing you can do as a parent to prevent sibling disputes upon your death is to create a will or trust. Both wills and trusts allow you to specify to whom certain assets will go when you die, as well as detail the terms for acquiring assets. Trusts offer numerous advantages over wills, but if you want to be able to make changes up until your death, it is important that you use a revocable trust. Otherwise, the terms you specify on the date you create the trust become set in stone.
Put property in your name and your child’s
Say you want to leave a significant asset, such as a home or vehicle, to one child in particular. Investopedia recommends putting the asset in both your name and the intended heir’s name before you die. Doing so means the asset transfers automatically to the joint owner. As a bonus, because the heir “owns it,” the property does not increase the overall value of your estate, which could help for tax purposes.
Explain any disinheritances
Though there is no law against disinheriting a child, the disinherited sibling can contest your decision during probate. If you plan to leave a child out of your will, consider explaining the reasons for your decision to the child or in your will to prevent future legal challenges.
Use non-legal avenues for divvying up small items
Though not legally binding, there are strategies individuals commonly use to prevent disputes among family members upon their deaths. One or more of these strategies may work well for your children.
The first is to gift items during your lifetime. If you have a valuable you know you want to go to your daughter, give it to her on her birthday, Christmas or just because. You can gift up to $15,000 per heir without having to pay taxes on those gifts.
You should also consider tagging items. Though a tag is not legally binding, a visualization of your wishes may go a long way toward preventing sibling disputes.
Finally, write a letter of instruction. A letter of instruction can outline who gets what and serve as a guide when it comes time to distribute property.