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The six most common estate plan mistakes.
What to consider to get it right.
Here’s a list of common challenges that come up, and some pointers for how to prevent them.
(shared by dayanim, lawyers and accountants)
Some examples:
- Nachman and Aron inherit a business from their dad. Neither of them has any clue how to run the business, but they decide to give it a try. A year later they sell what’s left of it and won’t talk to each other because of all the conflict that came up.
- Shalom steps up and joins his father’s business while he’s alive. He learns the ropes and puts in sweat equity managing and growing it, but when his father passes, his 4 siblings inherit an equal share. Should they have an equal say? How will they run the business together? Who’s in charge of what?
- Investment was never Gershon’s strong point, even though he’s a fantastic communicator and does well in his position. When, as the oldest, his parents leave him in charge of managing the family's investments on behalf of all his siblings, he’s worried (and so are the others).
- Yaakov managed his father’s business during his lifetime, while Aharon had nothing to do with it. Giving them equal shares and equal say gives Aharon full partner control, without giving him equal knowledge, experience, or necessarily the temperament to work with Yaakov.
A plan that just splits things down the middle can go wrong. Without setting up specific roles, or being clear about how to execute your plan, you can leave your children trapped with no clear, conflict-free way out.
Many arguments or colder relationships don’t happen at the beginning, when the will is read.
They happen later on, when siblings who were never meant to be partners are forced into a circumstance where they both have equal say.
To avoid this, consider arranging things so that there are no long-term partnerships.
The need for a lawer is obvious, but why a Rav?
Halacha has a default setup of who gets what: your daughters are entitled to very little, your firstborn son will get double of some assets, and your wife won’t inherit the estate.
When the stakes are high, it’s important to make sure that it’s legally AND halachically airtight, so no-one has the opportunity to challenge terms.
A rav with expertise in this area can help you add necessary clauses and make sure it’s valid and incontestable.
Why an accountant?
Often, a plan that sounds good in theory is difficult to carry out in practice.
For example:
- How should they split heirlooms fairly? Who gets what?
- Do they rent the house if a sibling lives there now?
- What if 3 out of four siblings want to sell the business but one wants to hang on to it?
A good accountant will offer suggestions to make your plan practical.
According to rabbanim, this is the #1 cause for family friction.
Circumstances shift, and the will needs to be altered. Some common examples:
- one child becomes the primary caretaker of their parent(s) in their later years
- a business or asset increases or decreases in value
Here’s how family friction can happen in such cases:
- HARD-TO-CONTROL BIAS
If you’re in the care of one child or dependent on them, it might be hard to resist making changes that favor them and hurt the others.
- STRONG TEMPTATION
Sadly, abuse of power by siblings who have power to edit the will - especially in cases where stakes are high— happen all too often.
- PRESSURE TO ALTER WILL
When another child/children pressures the trustee to make changes that conflict with the will. This leaves the trustee in a catch-22 situation: making the change negates your wishes, while not making the change causes tremendous family friction.
One helpful approach is to require all changes to be approved by the rav who was involved in reviewing the will, and knows the family well. Another is having more than one trustee, or appointing a trustee who is a trusted friend/expert, not a family member.
Without a paper trail:
- If someone expected more revenue or assets, and there aren’t any documents to prove what was or wasn’t there, they’ll be left with the unsettling thought of ‘Where did the it all go?’
- They might wonder if the business was managed right
- They could question if their sibling was as involved as they say they were, or if s/he’s being straight with them
Preparing a system for documentation can help your heirs trust each other and avoid suspicion or friction.
The right time to write a will won’t come knocking at your door.
“One of the biggest mistakes I see is letting perfection stand in the way. The perfect plan is a myth - it doesn’t exist. Even if a will is perfect for now, circumstances change, and tomorrow it may not be.”
— Rabbi Ari Marburger
Dayan at Bais Din Maysharim of Lakewood, author of “Business Halacha: A Practical Guide to Modern Business“
Taking care of this while you’re young isn’t just a smart approach for tax reasons, it also prevents several potential pitfalls:
- Many business moves you make - like taking a child into the business - have estate planning consequences. It’s much easier to be strategic about business dynamics, growth and structure when you’ve already thought about what you want the estate to look like in the future.
- People are often more suspicious of decisions made late in life — even when you have a sharp mind well into old age. They might question whether the decision was entirely your own.
- If you wait, you may not have the chance to share the responsibility with your spouse. It’s a hard enough task to face together, facing it alone is even more challenging.
You spent much of your life building your wealth. Your inheritance should draw your family closer.
It takes courage to face mortality, and strength to make tough decisions. But a whole family that gets along is the final kindness you can give to your children, and yourself.
You’re set!
