Using Mediation in Estate Planning, Estate Management, and Elder Care.
As attorneys, we tell our clients that the primary goals of estate and disability planning are to ensure that their wishes are carried out, and that the costs of administration are kept as low as possible. Most of our clients have as a fundamental value to leave a legacy by providing for their families and maintaining control when they reach an advanced age.
However, the use of traditional estate planning, where other members of the family are kept out of the process or are represented by their own attorneys, oftentimes leads to litigation and defeats the above values. The battle between family members creates uncertainty, increased cost, loss of control and increased acrimony. The purpose of this article is to describe how mediation can be used as a tool by the trust and estate attorney to avoid these pitfalls and best meet our clients’ goals.
Traditionally, a client meets in secret with his attorney. It is only when the client becomes incapacitated or dies, that the rest of the family learns of the plan that has been created. Because the plan was created in secret, the attorney is often provided incomplete or erroneous information. As a result, many plans are based on flawed assumptions.
For example, a husband and wife come in to see you together. They have a family business and several adult children. One of the spouses won’t bring up issues that they know are upsetting to the other, such as the capacities and wishes of the children. As a result, the attorney drafts a plan that does not take into account that the children may not want or have the ability to care for the business. Moreover, the children have different views about both parents and each other based upon long-standing emotions.
The testator has made major decisions without communicating with the rest of the family. The traditional planning process lends itself to the use of the plan as a way to punish or reward past conduct, whether real or imagined. The nature of the process engenders mistrust between the beneficiaries, and fear that someone else has unfairly influenced the testator. Nor surprisingly, traditional methods often lead to bitter and protracted feuds among the beneficiaries.
The use of mediation in estate and elder care issues is a more effective approach because it is a holistic process that encourages all of the issues – financial, legal and emotional – to surface in resolving disputes or planning a family’s future. Mediators are trained to frame issues in terms of the interests of the parties, and to bring hidden agendas and long-standing unresolved emotional issues to the surface. Indeed, mediation is the only dispute resolution process that offers the probability of a solution that includes reconciliation.
If we recommend the involvement of the entire family in these issues, we are creating the opportunity to carry out our clients’ wishes in a manner that minimizes the likelihood of litigation and increased acrimony, while maximizing the estate planning values. The use of mediation also provides the possibility of benefits not previously available in the traditional process.
Let’s look at a hypothetical case, which you get as an estate-planning attorney. The father, your client, is quite frail and elderly. He has three children, adults, all living out of town. He is married to his second wife, not the mother of his children. There has always been distrust between the siblings and the stepmother, especially between one daughter and the stepmother. The father owns a large ranch in Santa Ynez Valley, which presently generates an income of $100,000 per year in cultivation and cattle ranching. In today’s market it could be worth $10 million and there are other liquid assets of approximately one million dollars. The father has always been the autocrat of the family, not taking his children’s wishes into account. He wants to sell the ranch and place the proceeds in a life estate for the wife. Two of the children want to keep the ranch and turn it into a vineyard. They have hired an attorney who contacts you. After meeting and discussion with their clients, the attorneys agree to hire a mediator to meet with all parties.
The mediator would first speak individually to each family member B the father, the stepmother, and the three siblings. After these private meetings, a joint meeting would be held with all family members to discuss openly their thoughts and feelings about their desires and interests in the family assets. The mediator encourages parties to be honest about their fears, their differences and their hopes for the future.
At this meeting, the family agrees to a plan whereby one-half of the ranch will be sold and the proceeds will be put into a life estate for the wife, along with the other assets, and the other half of the ranch will be developed by two siblings into a working vineyard to be named after their father. The third sibling will put up working capital for the project and share in the profits. The third sibling will come in the summer and run a fresh air camp for inner-city children at the ranch. This plan is then taken to the estate attorney for the father who then creates the various estate planning instruments to effectuate the plan. By using mediation, the family has improved communication between family members, increased family teamwork, created opportunities to promote maturity and responsibility of the children, increased the financial well-being of testator and his wife, and honored their father’s memory.
The former is an example of how mediation is used as a tool in estate planning and litigation avoidance. Mediation is also being utilized more frequently as a dispute resolution process in will contests and in controversies regarding estate management and elder care. In a hypothetical conservatorship case, two sisters are feuding over the care of their mother. The sisters have never had an easy relationship. As they have gotten older, they have parted ways and have completely different values and lifestyles. The elder sister, Sue, a very organized business woman, was charged by her father on his deathbed to care for her mother when he is gone; the other sister, Margaret, a recovering alcoholic who has a marginal lifestyle, lives in the same town as her mother and has looked after her in the last few years. Mother has moved in with Margaret, but Sue believes that mother is not receiving proper care because of Margaret’s lifestyle and work schedule. She also believes that mother is mismanaging the assets of the family trust. Sue has filed for petition appointment for conservator of her mother’s person and estate. The mother is incensed that her daughter would file a lawsuit against her. She hires an attorney to fight the conservatorship. Margaret supports her mother.
At the mediation, Sue expresses her main interest in carrying out the wishes of her father and in being assured that her mother is well-cared for and safe. Mother expresses her anger about her daughter’s interference in her life and her desire to remain independent. Margaret, despite her dislike for Sue, reluctantly admits that caring for her mother is becoming more than she can handle, and agrees that her mother needs a higher level of care. The issues become one of proper asset management to provide enough income for mother to live in a board and care facility. Mother’s attorney agrees to share information about the trust assets with Sue and her attorney. At subsequent meetings, the two attorneys, with the help of the mediator, come up with an asset management plan. As a result of the mediation, the sisters have opened communication between them, the family assets are preserved and mother’s income is increased. Although relations are still strained between mother and daughter, there is some hope that the litigation is over, and mother, in time, will be open to a relationship with her daughter.
If part of a client’s legacy is to create an environment of trust and cooperation, use of a mediator will allow us to serve more needs of our clients. Mediators do not represent any of the parties, make no decisions, and have the skills to both identify conflicting issues and interests, and to help resolve them. By using all of the tools available to us, we can best serve our clients’ needs for certainty, harmonious relations, and smooth transfers. The use of mediation in estate transfer and elder care issues is one of the tools we should consider using to assure a result that is equitable, realistic and acceptable to the key parties.
By Christopher C. Jones and Judith Rubenstein © August 2004
