Tips to Help Siblings Avoid or Resolve an Estate Battle

Sibling disputes often erupt after a parent dies, and it’s time to divide up the assets of an estate, and these fights can result in lengthy and expensive legal actions.

However, a little forethought from parents can avoid such disputes, or they can be addressed by siblings who employ savvy strategies after a parent or both parents die. Consider the following to prevent or resolve conflict.

Estate-Planning Steps for Parents

Planning before death can address many of the issues that arise after a parent dies. Perhaps the most important action a parent can take is to have a will that specifies which sibling receives what in terms of property. Who inherits the house? A business? A valuable painting? The answers can be spelled out in a will.

Alternatively, a parent can give directions that the house is sold and the proceeds divided evenly. If a parent wants to leave one sibling out of the will, this is legally permissible. There is no rule on disinheriting a child. However, to avoid legal challenges by a disinherited sibling, a parent should consider discussing the matter with the child or explaining the reason in the will.

Another good practice is to use a trust to specify property dispositions after death. A parent can make a revocable trust that can be changed at any time up to death, assuming the parent remains competent. Putting property in the joint name of a parent and child so that the asset passes automatically to the child when the parent dies is another way to avoid conflict. This can be done, for example, for a bank account, brokerage account, or real estate.

Using a non-sibling executor or trustee for the estate can also help keep the peace. A third party who does not stand to gain from any decisions regarding property distributions may be a good idea, particularly if a parent believes there could be sibling disputes after they die.

How Parents Can Divvy Up Minor Items

Disputes over a treasured but valueless picture can cause bad feelings within the family, and those bad feelings can persist for a long time. A wise parent who anticipates that siblings may quibble over the household or other minor items after they die can take specific steps to thwart any problems.

Give Gifts During Lifetime

A parent may want to disburse certain items before they die so that a child can enjoy the items longer—this avoids claims to them after the parent dies. For example, if a parent has two daughters, the parent might give rings, bracelets, and necklaces to each, perhaps as birthday or holiday gifts.

This gifting strategy assumes that the value of the items is below the annual gift tax exclusion. In 2022, the annual exclusion is $16,000 and in 2023 it goes up to $17,000. This means that tax filers can give away up to $16,000 or $17,000 per person without paying tax on those gifts. Items of greater value require that a gift tax return be filed and may entail gift taxes.

Tag Items

It may sound tacky, but putting tags on certain essential items, such as a lithograph or first edition book, can be helpful. The label should name the sibling who will inherit the thing after the parent dies. While the tag does not create a legal requirement that the sibling receives the item, it is indicative of the parent’s intent and may go a long way in avoiding sibling spats.

Write a Letter of Instruction

A letter of instruction can be written by the parent outlining who gets what. Again, the letter is not legally binding but serves as a roadmap to the parent’s wishes regarding their property.

What to Do After a Parent Dies

If a parent did not take action before death, and there is a possibility of problems over distributing assets, it’s not too late to preserve sibling harmony or at least to minimize bad feelings. There are actions you can take to mitigate sibling strife.

Use a Mediator

When there is a serious problem involving a family business, a professional mediator can help. Bring all the siblings together and work with the mediator to reach a consensus.

Liquidate Assets

When siblings lay claim to the same assets and cannot agree, one option is to sell the assets and split the proceeds.

Defer to an Independent Fiduciary

Siblings can decline an appointment as executor or trustee so that someone else can be the fiduciary and make decisions on asset distributions. If siblings are named as fiduciaries, they need to formally decline the appointment. This step should only be taken if the siblings agree on the appointment of the person who will act as fiduciary—whether this is another person in the family, an attorney, CPA, or a bank’s trust department—and if the estate can afford the payment for this service.

How Siblings Can Divide Household Items

When it comes to distributing household items, you can do a few things to make the process seem fairer to each sibling.

Take Turns

Using this strategy, each sibling picks a desired item. For example, three siblings, Jude, River, and Charley, have strong ideas about what they want. To prevent any fights among the siblings, let Jude (the oldest) pick one item, then River (the middle child) can make a selection, followed by Charley (the youngest). Continue selections in this order until all of the desired items have been claimed.

Use a Lottery

Write a brief description of each item (e.g., grandmother’s photo in the silver frame) on a slip of paper. Put the slips in a hat, and then siblings can take turns drawing the slips until the hat is empty.

The Bottom Line

Parents usually know whether their children are likely to fight over their inheritance and should take action to prevent conflicts after their death. Whatever a parent decides, they should review actions from time to time. Feelings among siblings and financial circumstances can change, and plans should be revised accordingly.

If steps are not taken before death, you can still use strategies to minimize conflict during the estate settlement. Consult with a lawyer to decide the best course of action, and always write a will.