The Miami Herald

Even For The Middle Class, A Good Will Should Save Relationships -- Not Taxes

Mimi Whitefield
Miami Herald

It should have been a straightforward tale of business succession. A father and his son had managed a bowling alley together for a number of years and when the dad died, the younger man inherited the business.

But that's when the family feud began. To save on taxes, the father had put the bowling alley in one company and formed another company to hold the building and the land. Apparently through an oversight, he left the company holding the real estate to his son and his other children.

That put the son with the bowling alley in a compromising position with his siblings. ''They turned out to be horrific landlords,'' raising the rent far higher than market rates and showing no compassion for their brother's ability to make a living, says Les Kotzer, a wills and estate lawyer.

Though hardly as high-profile as the family warfare now surrounding tycoon Victor Posner's will and his multimillion-dollar estate, the case illustrates the type of internecine problems that can develop when wealth passes from generation to generation.

Kotzer and his partner, Barry Fish, have just written a book, Family Fight: How to Avoid It, that details the pitfalls of inheritances, their potential to tear families apart and how to avoid such conflicts.

It's aimed at the traditional family -- or maybe the Brady Bunch, says Kotzer, because it also addresses inheritance issues that crop up as a result of second marriages and blended families.

Wills have become a hot topic, Kotzer says, as the crush of baby boomers begin to inherit wealth from their parents. Exacerbating tensions, he says, is the reality that some credit-addicted boomers are ''depending on inheritances from their Depression-era parents to pay their debts'' and will fight tooth-and-nail because they don't want to let a penny of the inheritance go.

The Sept. 11 tragedy also has prompted more people to face their own mortality, the possibility of unexpected death and the need for estate planning.

Despite the proliferation of will kits and online forms that are supposed to make will preparation easy, Kotzer says, ''I'm telling people to go to a lawyer -- their own lawyer'' to have a will drafted.

The will that caused the bowling alley conflict was handwritten. Kotzer says he's seen sizable estates governed by homemade wills -- with plenty of ensuing problems.

Many books address estate planning from a tax-savings point of view. Not this one. ''We're not talking about saving tax; we're talking about saving families,'' Kotzer says.

The book gives practical advice on drawing up a will, appointing executors, organizing personal affairs and possessions so relatives aren't at each other's throats, and avoiding unintentional inequities.

It doesn't matter if an estate is large or small. ''I've seen fights over CD players, dining-room tables -- crazy things,'' Kotzer says.

Sometimes -- as in the case of the Posners -- family relations are already strained. ''But you make things a lot worse by not anticipating problems and discussing your plans while you're alive,'' Kotzer says.

Some parents, however, find it difficult to talk with their children about death, and some adult children hesitate to broach the topic because they don't want parents to think they're after their money.

But communication is crucial, Fish and Kotzer say.

If, for example, a parent decides to leave more to one child than another or cuts a child out of a will, they advise leaving a letter or videotape in which the parent explains the reasons for his or her decision.

In the final Posner will, for example, Posner explains that he is leaving nothing to three of his four children because he provided for them during his lifetime. However, his will is being challenged on the grounds that he wasn't mentally competent and that his business associate, Brenda Nestor, exerted undue influence at the time he signed his latest will.

If such a challenge is anticipated, lawyers suggest attaching a doctor's letter attesting to mental competency at the time a will is signed.

Kotzer and Fish have even coined a term, ''unintentional inequality,'' when parents think they're being fair -- but unintentionally distribute their estates inequitably, setting up conflicts between heirs.

One example: a parent who leaves a coin collection valued at $10,000 to one child and $10,000 in cash to another child. Over 20 years or so the coin collection may have appreciated and be worth considerably more than $10,000, while the cash inheritance remains static.

He advises people to review their wills frequently -- at least once every five years -- and more often if family circumstances change.

Second marriages can also be a treacherous area when it comes to inheritances unless the deceased has clearly spelled out his or her intentions in a will. Kotzer says he has seen a number of cases where one of the partners in a second marriage dies and leaves everything to the surviving spouse with the understanding that when the spouse dies, he or she will provide for the children of the first marriage.

But that doesn't always happen. Sometimes the spouse leaves everything to his or her own children, leaving one set of kids without the antiques that have been in their family for generations, their dad's war medals, or a stake in a business a parent may have worked a lifetime to build.

''Parents often make big assumptions when estate planning and one is goodwill among family members,'' Kotzer says.

While planning ahead won't eliminate all possible family conflicts over inheritances, the lawyers say it should at least minimize the risk of inheriting family turmoil along with the heirlooms.