Family Feuds

     The bloody feud between the Hatfields and the McCoys ended well over a century ago, spanned two decades and resulted in a dozen deaths in and around the Appalachian area of eastern Kentucky. This famous inter-family feud had all of the elements of a Hollywood drama.
     While the Hatfields and the McCoys may have settled their differences long ago, intra-family feuds are rather common these days following the death of a family member. That fact was confirmed in a survey conducted by the AARP/Scudder Investment Program of Americans age 50 and over. According to the survey, 20 percent of the respondents cited problems among surviving family members due to their inheritance, or lack thereof. Oftentimes these feuds are over tangible personal property and family business interests.

Tangible Personal Property

     The survey made an interesting discovery: cash is the most prized asset over which family members fight, but tangible personal property (e.g., heirlooms like antiques and jewelry) came in a close second. In fact, respondents reported that such property accounts for 47 percent of the feuds, followed by personal residences at 43 percent, other real estate at 31 percent and other investments at 11 percent. Fortunately, the laws of most states provide a flexible solution for the specific distribution of tangible personal property.
     As part of your estate planning, these states authorize a separate writing to be made on which you list the specific items and who is to receive them. In most instances, this writing may be handwritten, but it must be signed and incorporated by reference within the legal estate planning documents themselves. A little time spent preparing this writing as part of your overall planning can help thwart problems later.

Family Business Interests

     Did you know 90 percent of all U.S. businesses are family-owned or family-controlled? They represent one-third of the elite Fortune 500, generate one-half of the U.S. Gross National Product and pay half of the total wages earned in this country. Sadly, only one-third survive their founder. Although federal estate taxes can be blamed for part of this dismal survival record, family feuds are as likely the culprit.
     For example, will your surviving spouse continue the business or will they sell it? Who will buy it? Will any of your children take over the reins and, if so, will they buy it or inherit it? If they inherit it, how will the inheritance of your other children be equalized? Are there any in-laws who could become out-laws, just to stir up trouble? In short, intra-family issues can cause a family business to run aground. Only by carefully coordinating your personal estate planning with your business succession planning can these issues be resolved before they arise.
     Not surprisingly, the survey found that of the respondents reporting no conflicts over an inheritance, 63 percent said they had known what to expect ahead of time, with 82 percent believing their inheritance was fair.