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When to Use a Revocable Living Trust in Your Estate Plan
Thinking about a revocable living trust? Learn how it can support your estate plan with privacy, control, and flexibility for you during your life...
EP Wealth’s Scott Upham, CIMA®, CPWA®, shares how clear communication, updated documents, and proactive estate planning can help families minimize disputes over inherited wealth.
Ways to Minimize Family Disputes Over Inherited Wealth
Inherited wealth can bring about emotional and logistical complications, especially when family dynamics, outdated estate plans, or lack of clarity enter the picture. In my work at EP Wealth, I’ve seen that even well-intentioned estate plans can lead to disputes if they aren’t regularly reviewed, clearly communicated, and backed by professional guidance.
Before conflicts begin, here are key strategies worth considering:
- Communicate intentions clearly, without legalese
- Talk to heirs individually and as a group
- Work with advisors who anticipate what could go wrong
- Review old estate plans—what worked years ago may not work today
- Understand the unintended risks of account titling and beneficiary designations
- Structure plans with fair exit strategies for shared assets
Common Triggers for Family Conflict
IRA Beneficiary Designation Issues
Beneficiary designations can override a will or trust, and that mismatch is often what leads to problems. In second marriages, for example, naming a new spouse as the primary IRA beneficiary may seem reasonable, but if that spouse later passes the assets to their own children, the original owner’s children could be unintentionally excluded. This kind of result can happen even when no harm was intended; it’s often just a matter of missed follow-through or lack of awareness.
Outdated forms are another frequent issue. If beneficiary designations aren’t updated after major life changes—like divorce, remarriage, or the birth of grandchildren—they can result in distributions that don't align with the person’s current wishes.
Joint Account Ownership Missteps
Adding a child as a joint account owner for convenience—perhaps to help pay bills—can have unexpected consequences. In some states, that account may pass entirely to the surviving joint owner, bypassing the rest of the estate. I've worked with families where this single action caused years of resentment between siblings. Relationships were permanently damaged after a parent unintentionally created a sole inheritance for one child just by the way a bank account was titled.
Equal Isn’t Always Equitable in Estate Planning
It’s common for parents to default to a 50/50 split between children, thinking it is the most fair or least controversial option. But equal distributions do not always reflect the full picture, especially when one child has provided ongoing care or is in a very different financial position than their siblings.
On the other hand, when an estate plan does include an unequal distribution, but there is no explanation given for it, that can also create confusion and resentment. Decisions that seem logical to one person can feel arbitrary or even hurtful to others. That is why it is important to consider both the numbers and the context, and to clearly express the reasoning behind your choices whenever possible.
Communication Is Key
In many families that are able to avoid conflict over inheritance, clear communication plays a central role. That doesn’t mean putting every financial detail on the table, but it does mean being clear, direct, and proactive about what you intend.
Start by expressing your wishes in plain English. “Here’s what I want to happen, and here’s why.” That context can be especially important when the plan involves unequal treatment, shared property, or complex distributions.
Whenever possible, have conversations with heirs one-on-one before gathering everyone together. Group conversations can surface emotions and misunderstandings quickly; laying groundwork ahead of time can help ease those tensions.
The Advisor’s Role in Reducing Conflict
As financial advisors, we’re often asked to play a role in these discussions with heirs. We’re not there to take sides, but to help bridge differences in financial knowledge, personality styles, and expectations. Having a third party in the room who understands the full picture but isn’t emotionally involved can help prevent a difficult conversation from turning into a lasting conflict.
In times of stress, like the death of a loved one or a health crisis, families often turn to us to help them think things through clearly and make rational decisions. Another part of our job is to consider the “worst case scenarios” in regard to inheritance planning that most people would rather avoid. We’re paid to be objective and to identify potential conflicts or oversights so they can be addressed early and as constructively as possible.
What’s really fulfilling in this job is being able to empower families with the tools and knowledge they need to make confident decisions and carry out their plans exactly according to their intentions.
Why “Good Plans” Go Bad Over Time
An estate plan that once felt complete can become outdated more quickly than people expect. Even documents created four or five years ago may no longer reflect current family needs, tax laws, or financial priorities. Life moves fast, and the assumptions behind an old plan may not hold up today.
Here are a few common reasons plans stop working as intended:
- Planning structures may no longer be appropriate
Credit shelter trusts are still used in some cases, but changes in estate tax law—such as the ability to transfer unused federal estate tax exemption to a surviving spouse—have made other strategies more effective for some families. Older plans that were built around outdated tax thresholds or strategies may now limit flexibility or access to assets in unintended ways. - Legal documents may not reflect current priorities
Many estate plans were written with a specific set of people, relationships, or assets in mind. As family members age, pass away, or grow apart, those assumptions can become misaligned with reality. Roles like trustee, executor, or power of attorney may need to shift as well. - Outcomes may be unclear when too many parties are involved
Without clear exit strategies or decision-making guidelines, shared inheritance—such as real estate or business interests—can lead to gridlock among beneficiaries with different goals or levels of involvement. - Small oversights can cause bigger problems later
If beneficiary designations, account titling, or ownership structures are left untouched, they may override what the estate documents are trying to accomplish.
The point is not that the original plan was flawed. It may have been exactly right at the time. But plans age, and the risk of conflict grows when they are left untouched for too long.
Reviewing your documents regularly with a qualified advisor or estate attorney is one of the most effective ways to help minimize disputes and potentially reduce stress for the people who may eventually carry out your wishes.
When to Revisit Your Estate Plan
Structures and Tools That Can Help
Family Trusts vs. Marital Trusts
Older estate plans often divide assets between a family trust and a marital trust to preserve estate tax exemptions. But depending on how those trusts are written, this structure can limit access to funds for a surviving spouse.
For instance, if all assets go into the family trust and that trust only allows income distributions, the surviving spouse may not be able to access principal when needed. Meanwhile, the marital trust, which may have allowed broader access, is left empty. This can create financial strain, even when the original intent was to provide support.
Plans like these made sense when estate tax limits were much lower. But without updates, they can create unnecessary restrictions or overlook better options available under the current law.
Family-Limited Partnerships
These can be helpful when multiple heirs will inherit real estate or a business. They offer a governance framework for decision-making and allow for more flexibility if one family member wants to sell or step away.
Without this structure in place, disagreements over property use, management, or liquidity can lead to prolonged conflict or even legal disputes between family members.
Irrevocable Trusts
Often used for long-term planning, irrevocable trusts can help define how assets are used and protected. But they must be structured with clarity. Vague or overly complex language can lead to confusion—and in some cases, litigation.
Keep Your Estate Planning Up to Date
Estate planning should reflect where your family is today, not where it was years ago. Revisiting your plan regularly can help reduce the risk of conflict and support the outcomes you intend. An estate planning advisor at EP Wealth can help you navigate updates, evaluate potential issues, and bring clarity to complex decisions.
Contact an advisor near you to explore EP Wealth's estate planning services and discuss your unique financial planning needs.
DISCLOSURES
- EP Wealth Advisors, LLC. is registered as an investment advisor with the SEC and only transacts business in states where it is properly registered, or is excluded or exempted from registration requirements. SEC registration does not constitute an endorsement of the firm by the Commission nor does it indicate that the advisor has attained a particular level of skill or ability.
- An estate plan is a helpful tool that can assist individuals in managing and arranging affairs in the event of death or incapacity. However, the scope and extent of the plan varies depending on the unique circumstances and desires of the individual client. It is for this reason, that the analysis encompassed herein is not intended to be comprehensive in nature nor should it be interpreted as legal advice. Please consult a legal professional to determine the extent, scope, and the drafting and creation of the appropriate estate documents. EP Wealth Advisors is not in the business of providing legal advice or preparing legal documents. Our review is limited to and in association with Financial Planning only.
- Request an appointment with an EP Wealth Advisor or Estate Planning Advisor when you have a minimum of $500,000 in investable assets – which includes qualified retirement plans (IRA, Roth IRA, 401(k), taxable brokerage, cash (savings / checking) and CDs. Investable assets do not include your home, vehicles, or collectibles.
- The need for an estate planning advisor or financial planner and/or the type of services required are specific to the uniqueness of each individual’s circumstances. There is no guarantee or warrantee that the services offered by EP Wealth Advisors, LLC will satisfy your specific financial services requirements. Services offered by other advisors may align more to your specific needs.
- Information presented is general in nature and should not be viewed as a comprehensive analysis of the topics discussed. It is intended to serve as a tool containing general information that should assist you in the development of subsequent discussions. Content does not involve the rendering of personalized investment advice nor is it intended to supplement professional individualized advice.
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