8 Inheritance Mistakes That Can Tear Families Apart

Leaving an inheritance isn’t always the windfall one might expect. When we hear the term inheritance, many envision a generous lump sum of cash being passed down and a quick, easy way to get ahead financially. Yet, quite often, the opposite ensues.

Inheritance disputes can tear apart family bonds and cause permanent emotional damage. Luckily, many of these mistakes are avoidable with a bit of foresight and some open conversations in the present.

Below are eight of the most common inheritance mistakes — and how to prevent them.

Many Americans never create an estate plan outlining how they’d like their final affairs handled.

Most aren’t ill-intentioned. Death seems a far-off fact or something we don’t want to think about. Plus, many people who live paycheck to paycheck may feel they have nothing heritable to pass down.

An estate plan is still vital. It avoids confusion or in-fighting among your next of kin and makes your wishes crystal clear.

A will is a document that can outline your wishes; however, things often play out much differently. Even if you designate who gets what in your will, your heirs could wind up with nothing. It’s usually a matter of what assets remain after debts are settled.

Doing estate planning with an attorney now can offset some of these challenges. They may recommend establishing an irrevocable trust or other protective measures to preserve your family’s inheritance.

Joint tenancy, or the joint ownership of assets, can help avoid probate. In some scenarios, this makes a lot of sense. It’s logical for both spouses to co-own the house or bank account.

However, if the co-owner of a house or bank account is a grown child or relative, this can cause resentment among family members. It often leads to hostility, suspicion, and permanently shattered family bonds.

Talk to an estate attorney to avoid privileging some family members while disinheriting others. They can recommend the best mechanism to transfer assets based on your family situation.

Talk to family members in advance about who will care for your minor children should it be necessary. This can avoid in-family bickering during a period of tremendous grief and ensure the care transition happens more smoothly.

Many parents leave their children with unequal inheritances, and often, this has nothing to do with family favorites.

If one adult child is physically disabled and unable to access the lake cabin or use the jet ski, it may make more sense to leave that child a larger cash inheritance and leave the vacation property to their sibling.

Parents may also consider each child's financial needs. They aren’t punishing their more “successful” kids by giving them less. Instead, they are considering how much financial support they would have continued to provide if they were still alive.

An uneven distribution of assets is one of the biggest sources of family hostility. You can avoid it by explaining your intentions now. Leaving behind a letter of intent is also helpful so all the kids are literally on the same page.

Update your beneficiary designations. The person you designated in 1993 may have since died or fallen from your good graces.

Life situations change. Relatives pass away. Children-in-law and grandchildren enter the picture. Don’t assume your decades-old documents can stretch to accommodate these changes. Sometimes, old beneficiary designations can trump newer wills. Regularly review and update your beneficiaries.

Inheritance disputes are as emotionally charged as any messy divorce. A neutral estate lawyer or family arbitrator can help mediate disagreements and prevent such delicate situations from becoming protracted battles.

Everyone can agree to make “Attorney Scott” the bad guy and remain amicable over Thanksgiving dinner.

Unexpected long-term care expenses can quickly drain an estate, leaving little for your heirs. Upfront planning — for long-term care coverage, health care costs, and Medicaid eligibility — can help you keep your estate assets intact and preserve your children’s inheritance.

Inheritance issues don’t have to be a lasting source of family bitterness. Planning and communication can prevent much of the conflict, especially if you can include heirs in the process.

Even if you don’t have cash in the bank or a house, heirs can squabble over sentimental items with no practical market value.

And remember, you don’t have to leave any inheritance for your kids. Many affluent Americans are choosing other means to disperse and build their wealth for numerous reasons.