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Siblings and inheritance: 3 points about preventing disputes

With every day that passes, adult siblings who grew up together get farther away from their common upbringing. Over time, many relationships become frayed - and often break down altogether after a parent's death gives rise to an inheritance dispute.

What can families do to minimize the chance that such bitter conflict will occur among the kids after the parents are gone?

Here are three points to reflect on as your family makes estate planning decisions.

Childhood rivalries among siblings can be rekindled in interactions concerning a parents' caregiving or estate arrangements.

On one level, siblings fighting over their parent's blessing is an archetypal problem. It's an experience that can happen to any family, including yours.

Examples are as old as the story of Jacob and Esau in the book of Genesis and as current as today's headlines. Recently, for example, the New York Times reported on a case in Arkansas in which three siblings are suing each other over millions of dollars missing from their mother's estate.

Many disputes arise from wrongdoing by fiduciaries. The choice of executor or trustee is therefore very important.

Executors and trustees often misuse their authority. Sometimes this takes the form of outright theft from the estate. Other times it involves self-dealing (such as by padding the fees for serving as fiduciary) or favoring certain beneficiaries over others.

Sometimes this wrongdoing is motivated by a sense of entitlement, such as when one child takes on an intensive caregiving role for the parent. Regardless of what led to it, however, breach of duty by a sibling serving as a fiduciary is very unfair to the other beneficiaries.

This is why getting good advice on choosing the right executor or trustee in the first place is so critical.

Transparency about the difference between gifts and loans can go a long way toward preventing many disputes.

Many parents help adult children financially. Often it is not clear, however, whether the money is a gift or a loan.

To protect against misunderstandings later, it makes sense to be clear upfront about whether the money is to be repaid to the estate or not.

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