CHAPTER 5:
FAMILY DYNAMICS: A CASE STUDY FROM MY FAMILY – TWO POINTS OF VIEW
Now that we’ve taken a quick look at how the probate process is supposed to work, let’s take a look at the real world.
You’ll see that you can’t count on the law and lawyers to solve all your problems. In my experience, most probate problems are really “people problems.”
Family communication is the key to solving them. Here’s a situation my Aunt Jane called me about years ago, involving the final disposition of the family home and a possible conflict between her children – my cousins Ann and Robert. (Of course, I’ve changed the names.)
You can imagine at least a billion variations of this scenario. I offer it only as an example of the type of thing you ought to keep in mind for the rest of this Crash Course and in reflecting on your own situation.
Aunt Jane’s health was failing, and I credit her with having the foresight to think about this issue in advance, while she was still around to deal with it. That’s probably the biggest take home message here.
My cousin Robert was going through some rough times when he moved back into the family home following the death of his father (Aunt Jane’s husband) 10 years prior. Since then, his two grown sons had come to live there as well.
Robert and his sons were in the construction and home remodeling business. They had done well at times, but they couldn’t put together 12 good months in a row. Meanwhile, however, they had kept the house in good repair and even made some additions. But they paid no rent.
The house represented Aunt Jane’s entire estate. Her Will directed it to be divided equally between her children – just Robert and Ann. Aunt Jane realized the house would have to be sold.
But Robert and his sons were ignoring that fact and living like they were there forever. Never mind that there was no chance they’d be able to buy out my cousin Ann. (The house was modest, but it was in the New York City area and had soared in value over the decades.) Without such a buyout it would be impossible for Robert to keep the house and for my cousin Ann to get her share of the estate.
Ann’s husband had recently died of cancer, leaving her a 45-year-old widow with three kids. She was surviving somehow but would desperately need her share of the estate once her mother passed away. Aunt Jane foresaw a big problem coming and called me to ask if there was something she could “put in writing” to resolve it. Her goal was to “be fair” by treating both her children equally.
So, could she “put something in writing?”
“Yes,” I told her. “It’s called a Will, and the one we did a while back is clear: Everything is split 50-50. But the situation has changed. Maybe an equal split is not fair anymore. Before you do any more writing, you should sit down with Ann and Robert and do some talking. There are two sides to this story. You have to make a decision about the house.”
Anticipate future disagreements and differing points of view. Bring the family together to discuss and resolve them while you’re still around to do so.
I predicted to Aunt Jane that Robert would surely – and justifiably – point to the value his improvements had added to the property. Ann would focus – also quite correctly – on her brother’s years of rent-free residence there. (Not to mention the priceless value of Aunt Jane’s cooking!) In other words, Ann might very well feel that Robert had been indirectly paid for his contribution already.
Aunt Jane was asking me, her lawyer nephew, to pull some legal document out of a hat that would magically solve her dilemma. But no lawyer can properly prepare any kind of document until they know what the client wants to do. Aunt Jane was expecting me to make decisions that only she could make.
I urged her to convene a family meeting. Look at the real estate market and make some financial calculations. Put a dollar figure on the home improvements Robert made and compare it to the rent he saved for many years by living there.
“Your guestimates won’t be perfect, but tell Robert and Ann they need to reach a compromise,” I told her. “I can offer my neutral opinions, but you’re in charge. After you’ve made your decisions, I’ll revise your Will and prepare any other documents we need. Otherwise, there will surely be a fight in court, and your kids will never speak to each other.”
Sadly, my cousin Robert died tragically not long after this discussion. I was not consulted further about the issue and don’t know what happened to his sons. I suspect that things were worked out amicably.
But I can tell you how things could have worked out if Robert had been alive when his mother died:
At my strong suggestion, Aunt Jane had chosen Ann as the sole Executor of her estate, abandoning her plan to name her two children as Co-Executors. Robert had an on-and-off substance abuse problem, and it could have been a disaster if he had any authority over the estate when Aunt Jane died.
So, had Robert survived – and had there been no prior discussion and agreement about the house – all decisions would have been made by Ann. Ann would have had the power to determine the selling price of the house. She would have had the legal authority to decide the dollar value of Robert’s home improvement claim.
As Aunt Jane’s Executor, Ann would have been her tenant brother’s landlord. She could have started charging Robert rent until the house was sold and could even have evicted him. Of course, Robert would have had the right to make his case in court and fight with his sister every step of the way.
Eventually, a judge – who I guaranty would be annoyed that brother and sister couldn’t settle the dispute on their own – would be forced to weigh their claims and reach a decision. Who knows if it would have been “fair?”
The point is that the family would have been ripped apart. That’s the worst fear of any parent when doing their estate planning.