Regardless of the size or complexity of your estate, there are no guarantees that your beneficiaries will agree with the terms of your estate planning documents. For that reason, I suggest that everyone read this article by Ashlea Ebeling on reducing the likelihood of estate litigation.
I particularly like #4 “Transfer a Business with a Contract”. If avoiding litigation is the primary goal, the recommendation to transfer a business interest prior to death is great. Expanding on Ms. Ebeling’s recommendation, here are a few things to keep in mind. First, the tax basis of the business interest transferred may vary depending upon whether it is transferred during the owner’s life or after his or her death. Talk to a tax advisor regarding the values of each transfer. The transfer must follow all company policies for transferring the interest. Also, any contracts effecting the transfer should be properly executed. Once a pre-death transfer is complete, review all estate planning documents to ensure that they are not in conflict with the completed transfer.
If you do not own any business interests, take note of the following: #1 Treat Siblings Equally, #10 Spell Out Any Disinheritance, and #8 Establish that You Are of Sound Mind. All of these points are equally important for large, medium and small estates. As always, talk with your estate planning attorney and other advisors to ensure that your estate planning documents properly reflect your wishes.
