When someone passes away, the individual tasked with the duty of wrapping up the final affairs accepts fiduciary duties. This individual becomes responsible for ensuring the execution of the deceased’s person’s wishes. He or she may also need to maintain peace between family members and keep demands at bay while tackling the legal and financial responsibilities that come with the role.
CNBC identifies fiduciary choices as one of the top factors that cost estates thousands of dollars. In fact, it shares one example of how family members squandered $600,000 of a million-dollar inheritance on a decade of litigation.
What worsens the risk of litigation
At first glance, it may appear that fractured families suffer the greatest risk of fighting over inheritances. This is often true, but even seemingly perfect families may begin to fight over money. Sometimes, resentments only surface after parents pass away. Who the deceased person chooses as the executioner may feed feelings of favoritism.
How to reduce the risks
There is no foolproof way to determine what family members may fight over and eliminate all risks involved. However, there are some things individuals have done over the years to reduce the risks:
- Planning family meetings to determine who gets what, even when there is not much to give
- Trying not to leave estate plans that may lead to surprises for beneficiaries
- Assigning inheritance assets with the interests of the individuals
- Finding independent parties to serve as trustees and executioners
Litigation risk in amicable families
Note that even when family members do get along, fiduciary duties may prompt litigation in other ways. Forbes shares that when individuals fail to fulfill fiduciary duties, the affected parties may become liable to damages. The beneficiaries may pursue these damages through civil litigation.