For starters, life will be easier if you already have a great relationship with any siblings you might have — one that’s free of jealousy, resentment, or long-simmering competitive tension that may result in a protracted battle over who gets the Persian rug from the living room.
But since sibling relationships are already long-established, less-than-perfect family dynamics can be partially offset by a commitment to communicate open and honestly, with a shared goal of avoiding crippling legal fees that may trump the inheritance in question.
That’s a real risk: Many experts told Considerable that the inheritance process often involves dealing with an executor of the estate, and then going through probate court and the various costs associated with it.
This can be exhausting and time-consuming, and options that avoid probate should be considered.
IN TRUSTS, WE TRUST
Patricia Russell, Certified Financial Planner (CFP) and founder of the personal finance blog FinanceMarvel, is a proponent of putting assets in a trust instead.
“Before your parents die, encourage them to set up a trust to distribute their assets,” Russell said. “A trust will allow your assets to go right to the beneficiaries while not having to go through probate. Trusts usually can avoid state probate along with the associated expenses that come with it.”
Philip J. Ruce, estate planning attorney and owner of Stone Arch Law Office in Minnesota, had a similar suggestion
In describing the difficulties of divvying up property among beneficiaries, Ruce recommends putting the property in a trust, so that “rules and guidelines can be created around who will be responsible for making decisions, who will fund repairs, or who would make decisions regarding the sale or rental of the property.”
Trusts not only can help avoid probate costs, they can be set up to provide more long-term stability and structure as opposed to a one-time payout that may get spent quicker.
The tradeoff is less immediate control over what you are inheriting, but it could end up saving money in the long run.
Russell offers a final take on setting up a trust: “If the asset is worth a significant amount, the taxes that they would have to pay could be astronomical. In the end, do your research on trusts and talk to a professional about setting one up.”