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Avoiding disputes between children after death

Any St. Paul resident who grew up with siblings or has multiple children understands that fights are a natural occurrence between family members from time to time. While most fights can be resolved in a reasonable manner, more serious disputes can linger between family members if the issues are not properly addressed.

Unfortunately, this is not an uncommon occurrence when it comes to the distribution of property after a loved one's death. Disputes can develop between surviving family members if certain inheritance issues are not clearly addressed in a person's estate plan.

For example, if a parent makes a loan to one child but not another, confusion can result as to whether the loan was meant as a gift, or whether the loan should be deducted from that child's inheritance upon the parent's death. Parents can avoid this uncertainty by expressing their wishes in writing, such as by stating that the loan is to be considered a gift to the child or is to be forgiven at the parent's death. In these circumstances, the children might then receive an equal share, despite the fact that one child had a loan made by the parent during lifetime.

Alternatively, if the parent does not wish to have a child's loan forgiven at death, the parent could express that in his or her will as well. For instance, the parent could provide in writing that the loan is to be treated as an advance on the child's inheritance. In this circumstance, the children might be given equal inheritances, but one child's inheritance would be reduced by the amount of the loan.

Ultimately, it takes careful consideration for parents to address issues such as how to handle a loan to a child at the parent's death. The parent retains the ability to make these decisions, no matter what the outcome. From an estate planning perspective, however, the best course is typically to spell out these wishes in writing, in order to avoid potential confusion or disputes between heirs after the parent's death.


Source: The Spectrum, "Estate plan can prevent problems after death," Scott Halvorsen, Aug. 11, 2014

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