The Family Fight - Planning To Avoid It

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Dollar Signs: Avoiding Financial Family Feuds

COLLINS SPENCER, CNN ANCHOR: DOLLAR SIGNS is up next.

Welcome to DOLLAR SIGNS, where we help you make the most of your money. Major changes in the family such as divorce or death can cause squabbles over money. Some of the big mistakes that lead to financial feuds: assuming that everyone knows your wishes, ignoring your children's rivalries, and not putting your wishes in writing.

Think your family is immune? What you hear over the next half hour could change your mind. We have got two financial experts to help you avoid the pitfalls that lead to clashes over cash with us today. Jennifer Openshaw is head of the Family Financial Network in Los Angeles. And Les Kotzer is a wills and estates lawyer in Toronto, Ontario. He's the author of "The Family Fight: Planning to Avoid It." And I want to welcome you both to the show.

LES KOTZER, WWW.FAMILYFIGHT.COM: My pleasure to be here, Collins.

JENNIFER OPENSHAW, FAMILY FINANCIAL NETWORK: Nice to be here, Collins.

SPENCER: Good. Les, I'm going to start with you. Is fighting over wills and estates common?

KOTZER: I'll tell you, Collins, my practice is dedicated to saving families. I don't deal with taxes, my practice is strictly about saving families. And I'm seeing so much fighting. It's tragic what I'm seeing, brother against brother, sister against sister. And my mom once said to me that her greatest assets were not in her safety deposit box, they were in her family photo albums, her children, the loved ones. And we have to bring family back into estate planning. We've lost that. We're so focused on how much money we're leaving, the assets. We've got to bring family back, and that's what I'm here to talk about today.

SPENCER: Right, and that's very good advice. Jennifer, why is estate planning so much more important today, especially for women?

OPENSHAW: Well, Collins, if you look at the trends, women are earning more, they're bringing more money and more assets into the family than they used to before. More interestingly though is that S10 trillion of assets will pass between the World War II generation to the Baby Boomers. And guess who is going to be passing that money? By and large, it's going to be women. And if you look all over again, women tend to be taking care of the financial issues after the passage of their husbands. And most men will pass before their wives.

SPENCER: OK. Jennifer and Les, I have an e-mail from a viewer. Let me read this from Kevin from Anchorage. Kevin says: "I recently buried my father in California. The woman who was his caretaker has power of attorney for his living trust. Can she now control my father's assets after his death? What rights do I have?" Who wants to take a stab at that?

KOTZER: Well, generally, a power of attorney passes away when the person passes away, and then the trustee would look after the trust. But it's complicated when you get involved in living trusts. That's all I have to say to people out there. Be very careful, go to a lawyer, let the lawyer help you with this. Too many people are winging these things on their own today and I think people like this have to go to see a lawyer to really find out their rights in their particular state.

SPENCER: OK.

OPENSHAW: A couple things, Collins, if I could, that folks should know about power of attorneys, is there can be limited ones where somebody has authority to make very specific actions or maybe even just for one day or over a short period of time; and durable power of attorneys, where they have wider latitude to maybe handle your investments et cetera. Typically things are going to be spelled out in a trust or a will and that would carry on past their death.

SPENCER: OK. And Jennifer and Les, we have Bruce on the phone from Tennessee. Bruce, go ahead. CALLER: Yes. I was wondering what grounds I have to recover insurance policies of the co-executors of my father's estate? My sister and myself are both co-executors, and she took all of the insurance policies and cashed them in. In what way do I go to recover?

KOTZER: Well, an executor has an obligation to account. And it's very important that if somebody has taken advantage of that estate that you go to a lawyer and make some sort application in your state to try to recover this. The problem is sometimes once the money is gone, it's gone. So that's why it's very important that people understand executors have to account for beneficiaries, and they just can't take the money for themselves. If you're named as beneficiary, you're entitled.

OPENSHAW: What's also really important to you, particularly if you're going through a divorce, is that both spouses know what assets the family has and what income stream they have, because strange things have been known to happen and things can disappear. But insurance certainly is part of the overall estate and certainly should be part and disclosed as you're going through the process.

SPENCER: How do you get people to understand you can't wait to do this?

KOTZER: Well, I'll tell you something. My practice, as I mentioned, is about avoiding fighting. We wrote this book, "The Family Fight: Planning to Avoid It," because there's so much out there on how to save taxes. And so many people are so turned off by the issue of tax that they feel that this doesn't apply to them.

As you'll see in the book, it applies to everybody. It can happen to any family. I've seen fighting over personal items. I've seen fighting lunchboxes. I had two brothers come into my office, fighting over this lunchbox, a Howdy Doody lunchbox. And one took a book off of my desk and threw it against the wall just missing his brother's head.

Parents have to understand that their most important assets are family and they themselves can inadvertently leave the seeds of the destruction of their own family, Collins. So often I see parents who don't do a will, do homemade wills, make bad assumptions, like assuming that their kids are going to work it out. Well, in most cases that I see, it's the lawyers that have to work it out because the parents didn't do proper planning. It's tragic what I see.

SPENCER: We have got another caller in, it's Mike from Florida. Mike, would you like to go ahead with your question?

CALLER: Les, can you hear me?

KOTZER: Yes, sir.

CALLER: Les, I have four siblings, we're in a probate situation, equal share in the wills. One of the five siblings refuses to accept his equal share. Have you ever encountered this type of a scenario, and if so, do you have a tip for solving it?

KOTZER: Yes, I have. There are children that do want to renounce their gifts, sometimes it's bitterness towards the parents, or siblings, I don't need your help. I think you have to talk to each other, because he may come back or she may come back later and feel very bad of what she had done or he's done to the family.

The fact that you may just want to offer, say, look, we don't want your money, it's yours, it belongs to you, or maybe if you don't want it, how about your children? It belongs to them. Because they may come back to you guys later, the nephews and nieces, you know, you stole our money.

So be very careful about that. My whole message here is we have got to save the families. These families that we've shared childhood with, the nephews, we don't want to go to parties and have to avoid our families. And this is what I'm seeing over and over again where parents call and tell me, I don't want my kids to have to go to a party later in life and never talk to each other again. And it's troubling to me.

SPENCER: All right, great information. We're going to come back and answer some more information for the viewers out there. We have got two financial experts to help you avoid the pitfalls that lead to clashes over cash with us today. And that was Jennifer Openshaw and Les Kotzer. And we'll be back to give you more information about avoiding your family fights. You can e-mail us at dollarsigns@cnn.com. DOLLAR SIGNS, call 1-800-807-2620, and we'll be right back.

(COMMERCIAL BREAK)

SPENCER: Welcome back to DOLLAR SIGNS. Death and divorce, they are two of the most damaging things that can happen to a family. They can also create major feuds over money. Family financial expert Jennifer Openshaw and attorney Les Kotzer have witnessed a lot of such feuds. They are telling us how to avoid them.

And thank you for sticking around. I have got an e-mail from Don. And I'm going to throw this to you, Jennifer. Don says: "I am a single parent and pass away without a will, does my estate go automatically to my two children evenly distributed?"

OPENSHAW: If he is single, it would typically go to your children. But if they're underage, typically what is going to happen without having an executor is that the state is going to decide how those assets will be distributed. You will still have to go through the process. And so absolutely, if you have kids, particularly again, under 18 and they may need a guardian, you absolutely need a will. That will would designate who the guardians of the children are as well as the distribution of those assets. And you don't have to spend a lot of money to do it.

SPENCER: Good. We have Terry on the line from Maryland. Terry, would like to go ahead? CALLER: Yes, sir. My name is Terry Simon (ph). And I have an uncle that passed, and he left his will in secret with only the executive -- lawyer knowing what is in there. And they will just say, well, you're getting 21 percent. But they're not actually disclosing what the assets and the family is fighting over, what money is what. But nobody knows except for the lawyer. So how do we get that information disclosed to us?

OPENSHAW: That's actually -- I just want to point out something. Les may want to mention it. But that's actually a great example of why I think it's so important for parents, particularly to sit down and share with their children what their plans are, because it's going to avoid so many arguments down the road.

I think many people, parents assume that everything will be fine, they ignore the sibling rivalries, as Les was mentioning earlier. And there's no question that those feelings, those emotions are going to come out later. And so first of all, parents should put in writing what their wishes are, but secondly, to share them with their children and other heirs.

KOTZER: I agree absolutely. And I think that it's important that you contact the executor because as I said before, the executor has to follow the will and the executor has an obligation to account. My partner, Barry Fish, and I, we do a lot of estates. And we -- you know, people call us and we want to be open and we tell the executor, be open to as much as we can with the beneficiaries, we don't want people dragging the executor through the court.

And you know, we have -- as I mentioned before, we have a book. We also have a Web site, familyfight.com. If you want to read stories about fighting over -- with executors and fighting between brothers and sisters, Collins, I'll tell you something, people e-mail us on our Web site, they can e-mail me direct, my site is right on that site, familyfight.com.

And they can tell us their stories. And if we can do any help, or whatever we can do, we can e-mail back. But the fact is we see this over and over again. He's not disclosing. My brother won't tell me. Parents appointed only one sibling and not the other two. So in one case we had to ask two brothers to leave the room because the sibling who was the executor said, I want my brothers to leave the room. And we had to ask the brothers to leave.

All the parents had to do in their will was put all three as executors with a majority clause which would allow all three to be in the room and two out of three make a vote. And that would have created democracy. And unfortunately, parents don't realize a lot of these things.

OPENSHAW: And I think sometimes -- by the way, I want to point out that sometimes having multiple siblings as executors on the other side can create some conflict. And so it may make sense in certain situations to have a family friend or somebody that you believe and also that the children believe will be fair and appoint them as the executor. KOTZER: Absolutely. But be careful in your own family of creating a dictator of the executor. Your parents have to talk. And as a child out there, if you don't want to be an executor, tell your parents. There should be a communication now, it shouldn't be a surprise on the death, oh, I'm an executor, what do I do? There should be a communication throughout your life. And if you don't want to do it, tell your parents now.

OPENSHAW: And Les, obviously, the cost can be very high too, to be an executor...

KOTZER: Absolutely.

SPENCER: And I'm going to cut in here because our phones are just blowing up. There are a lot of viewers interested in this topic. We have Linda from Colorado on the phone. Go ahead, Linda.

CALLER: Yes, my mother received an inheritance from my aunt. And my sibling and my nephew are accusing myself and my husband of unduly influencing her and her use of this inheritance, and not advantaging that inheritance, you know, not having it grow the way it should. And they want to sue us after she is gone.

KOTZER: Are you the executor? I don't follow the question.

CALLER: Yes.

KOTZER: Has she...

CALLER: I am the executor, yes.

KOTZER: Well, an executor has an obligation to invest money, usually it's prudently or wisely in investments. I don't think you're under any obligation to make this grow 100 percent. But again as executors there is liability. You have to make sure those assets are protected, that there's insurance on assets. It's not an easy job to be executor. A lot of people think it's an honor. When you read the book, and you go through some of these issues, realize it's not necessarily an honor. There is a lot of obligation on the executor.

OPENSHAW: And what Les is referring to, too, is that obligations -- the fiduciary obligations that you as an executor have to respond to as if it's your own money.

SPENCER: Jennifer, we're going to have to go to a quick break. We'll be back, a lot of people interested in this. If any of these scenarios seems familiar, or you're worried about your own family financial feud, contact us. E-mail your questions to dollarsigns@cnn.com or telephone us, the number is 1-800-807-2620. We'll be right back.

(COMMERCIAL BREAK)

SPENCER: Welcome back to DOLLAR SIGNS. We're talking about how you can avoid fighting over money when someone in your family dies or get a divorce. Family financial expert Jennifer Openshaw and attorney Les Kotzer are answering your questions.

And Jennifer and Les, I have an e-mail here from Jay from Pittsburgh. Jays says: "Is there a time limit to settle an estate, and if so, what is it?"

KOTZER: It depends. In some jurisdictions it could be a year. I've heard of other jurisdictions where it's less. There is what's called an executor's year in a lot of jurisdictions. They give the executor time to settle the estate, pay the debts, et cetera.

SPENCER: Jennifer?

OPENSHAW: I'm right with Les, and wrap it up, the sooner the better is probably better for everybody who is involved just to avoid sort of the anxiety and other emotional feelings that can emerge.

SPENCER: OK. And we have on the phone Gloria from California. Hello, Gloria.

CALLER: Hello.

SPENCER: Your question?

CALLER: Yes. I have income property, three adult siblings, two are kind of professionals, one is a teacher and the other one is business. The third has a mental disorder of sorts, and he can't communicate very well. My mother left them a similar property, and there was terrible consequences. It was income property. They could not get along. The two adult ones came to blows over the money, you know, received from the rental properties. The third one didn't receive any money.

It was set up for auto-payment, because it was not paid for. I should not have, however I borrowed money for them on my good credit record out of the property, because it was clear when she died. They each got equal shares, I saw to that, S40,000 or so apiece, and I put the property on auto-payment for all of the expenses. However I'm 78, I got tired of managing it. I turned it over to them, and there were dire consequences.

SPECNER: OK. Who wants to help her out?

KOTZER: I'll tell you, it's tragic to hear these siblings fighting. What I try to tell parents and kids is that, you know, these are the kids that shared the childhood, the kids that drove to the Grand Canyon in the back of dad's car together. I think it's time you start -- you know, in this situation, for any siblings out there, if you're about to fight, to look at your family photos, bring that back. I even wrote a song that's coming out shortly called "Photos In a Drawer" with the world famous Lou Mann (ph) and Wendy Watson (ph) because I'm trying to practice a little bit of emotional law, bringing people a little bit of heart -- tearing at the heartstrings. When I hear these siblings that are at war, they never talk to each other again. These are kids...

OPENSHAW: The other thing, too, is that your mother perhaps didn't think of the worst case scenario. And that's what parents really need to think about, is what's the worst case scenario, that one of these properties generates more income than another one, it goes up in value where one goes down in value. Those are some of the things that I think folks need to think about so that ultimately there's fairness and there's less of that rivalry.

KOTZER: And equality isn't always fairness either in a will. A lot of parents think if I just stamp an "equal" sign in my will it is going to be fair and equal and the kids won't fight. I've seen tremendous battles between kids where it was equal, because one child was a caregiver and the caregiver child says, it's not fair that I got the same as my brothers who live in Europe and they only call mother on Mother's Day. And I did all this work. So it's very important.

OPENSHAW: That's a really good point.

KOTZER: It's very important.

SPENCER: I've got a quick question. What about big ticket items? And we only have a limited amount of time here.

KOTZER: Well, remember, there's one thing, you can never share a painting on the wall or a table in the hall. And the fact is, is that, as parents you have to pay attention to these particular items. They're very important to these children. Talk to your kids now and do it now. Don't leave this up to chance. It shouldn't be a secret, it shouldn't be a surprise on a parent's death.

SPENCER: OK. Jennifer, we've got to...

OPENSHAW: And real quickly, property, for example, if it's joint tenants, that means that when I pass on, for example, it's going to go to my partner, which is going to override anything that's in a will. And that's very important for people to remember, the same with investment accounts, if there's a beneficiary listed, it will go there first .

SPENCER: All right. It was great to see both of you. Jennifer Openshaw and Les Kotzer, great information.

KOTZER: Thank you.

SPENCER: We'll have headlines when we come back.

 
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