Is there an inheritance time bomb ticking away in your estate plan? You might think you’ve taken care of everything, but a closer look could reveal a big problem just waiting to blow up at the worst possible time. With one or more of these inheritance time bombs lurking undiscovered, your estate plan – not to mention the family relationships you value so highly – could be at risk.

We came across this idea of “inheritance time bombs” in this insightful article from AARP Magazine.  It originally appeared in the April/May print edition, written by business journalist Laura Petrecca. As she explains, older Americans hold about $93 trillion in assets that could pass to younger generations. But if we elders fail to take these six inheritance time bombs into account when we plan for the disposition of our estate, the result could be disastrous.

Let’s take a look at Petrecca’s important list.

Inheritance Time Bombs: When Emotion and Money Collide

“Oh, the things some people will do over inheritance dollars,” Petrecca begins, evoking the recent news stories over famous inheritance conflicts, like the lawsuit between Priscilla Presley and her granddaughter over Elvis’ estate.

Petrecca explains that inheritance strife is common for the simple reason that older Americans hold a majority of America’s personal wealth, much of which is intended to be passed to younger generations. “And no matter how rich or poor a family is, every dollar has the potential to spark a disagreement,” she writes.

Inheritance Time Bombs Often Caused by Our Neglect

According to Petrecca, the cruelest thing you can do to your heirs is simply expect that your nonchalance about estate planning will be easily or magically fixed after you pass away. She writes, “Old paperwork may be set in stone upon your death; subsequent courtroom battles, if they’re even affordable (they’re not for many heirs), guarantee further strife.”

But with this article, she hopes to help. Here are some of the most common estate “time bomb” situations that Petrecca has seen, and how to fix them before it’s too late.

Inheritance Time Bomb #1: Failure to Take Action

The problem: your loved one refuses to talk about estate planning at all. Changes the subject, gets upset, or delays.

Regarding this common issue, Petrecca states, “First, the reality: Discussing estate matters is up to your parents. Their money, their decisions. But it’s important to ask.”

Having a non-confrontational way to start the conversation can help. David A. Handler, partner at the Kirkland & Ellis law firm in Chicago, suggests something like “I am trying to plan my financial future, and it would be helpful to know if you plan on leaving me anything when you are gone.” He says you can even put the blame on someone else, saying, “My financial adviser told me to ask about a potential inheritance.”

Handler says that if their response to your question isn’t “none of your business”, then you can ask if they’re willing to share a more specific amount with you. Just be sure to make it clear that it’s their money to handle however they choose. “You don’t want to sound like you are intruding into their affairs or making a money grab, but just seeking information,” he says.

Emphasize the Need to Avoid Undue Expense and Stress

Sometimes, the best way to emphasize the importance of estate planning to the reluctant is to talk about the emotional and logistical impact of adding stress to grief. After they die, the decision is taken out of their hands completely. Right now, by being proactive, they can have full control over their assets and give their heirs peace of mind.

“Without a will, it’s up to state laws and probate courts, which can lead to unnecessary time and expense, as well as assets not going to whom the deceased may want,” says Christopher P. Davis, partner at an investment management firm based in Morristown, New Jersey.

Petrecca adds, “If your parents express even an inkling of interest, volunteer to set up a meeting with a financial planner or an estate lawyer for them.”

Inheritance Time Bomb #2: The Caregiver Conundrum

The problem: after moving in with your parents to help them out with daily tasks and other caregiving responsibilities, they have decided to rewrite their will to leave you the family home…and your siblings don’t know.

Petrecca warns, “If your parents want to give you the biggest portion of the estate—whether it’s the house or extra cash—get this arrangement out in the open now. While some family members may see your help as a blessing, others may regard you as a mooch who lived rent-free and then grabbed more than your fair share.”

Communication Needs to Happen While Parents are Living

It’s ideal for your parents to communicate their more contentious estate decisions while they are alive and able to potentially mitigate any misunderstandings. This conversation can happen with siblings individually or as a group, depending on family dynamics, says Martha J. Hartney, principal attorney at Hartney Law in Boulder, Colorado.

Hartney also suggests keeping track of hours spent on caregiving, money used on expenses such as gas and food, and so on. “Such documentation can help disgruntled siblings understand why you are getting more in the will,” she says.

Petrecca adds that if you don’t already have one, it’s a good idea to create a formal personal-care agreement that outlines your duties and how you’ll be compensated. Then, share this with your siblings.

Inheritance Time Bomb #3: Trust Issues

The problem: you want to leave money for all of your kids as equally as you can, but one of your kids has habits or behaviors that worry you, like addiction or gambling.

For this situation, Petrecca recommends a trust, which is a legal document that lets you specify how you want your assets distributed after you pass. It’s ideal for any situation that needs more structure and is controlled by a trustee that you appoint, who has the power to make decisions in line with your outlined wishes.

Hartney explains that you can use a trust to distribute money at certain ages, encourage positive behavior, or restrict money to children engaging in harmful activities. “But to avoid making a trust inflexible, you might appoint what’s known as a trust protector. That person can modify a trust in response to changing circumstances while maintaining fidelity to your original intent,” she says.

Find the Right Attorney, Select the Proper Trustee

To set up a trust properly, you need to work with a trusts and estates attorney—which can cost a few thousand dollars—and you’ll need to specify how it will be funded.

Petrecca writes, “When selecting a trustee, consider a close friend, family member or professional trustee—but not your troubled child’s more responsible sibling,” the latter of which is a recipe for disaster. But if you’re worried about one child feeling singled out, you can create an appropriate trust for each child.  

The final step? Tell your children about the trust. Michael Lehman, CEO of investment adviser Premier Path Wealth Partners, says, “We’ve had adult children inherit assets in the form of a trust, with no prior communication, and resent the fact that restrictions have been placed on their inheritance.”

Inheritance Time Bomb #4: A Blended Family

The problem: you want to leave your assets to your new spouse and your kids from a previous marriage, but not your stepchildren.

Elliott Appel, founder of Wisconsin-based Kindness Financial Planning, says that this is actually a common situation, and it’s okay to leave money in this way.

But, Petrecca warns, don’t assume that if you leave everything to your spouse, they will kindly bequeath what’s left to your kids. “Instead, as in the previous time bomb, consider a trust. A common strategy is to leave money to support a surviving spouse while designating that, upon the spouse’s death, the remainder go to your children,” she writes.

Choose Your Trustee with Special Care

Appel explains that the hard part of this situation is often choosing a trustee. The surviving spouse might spend recklessly, leaving less for the children, and if the child is the trustee then it leaves your spouse in the awkward position of asking that child for money. “Hiring a professional could reduce conflicts,” he says.

Harry S. Margolis, author of The Baby Boomers Guide to Trusts, suggests that when you set up a trust that initially provides for your spouse, give your kids the right to annual accountings so that they can see how the money is being used. “Transparency can often prevent abuse,” he says, and adds, “You might also want to give your children something directly upon your death so that they’re not waiting for their stepparent to die. This is particularly sensible if your spouse is much younger than you.”

Inheritance Time Bomb #5: Passing Along the Family Business

The problem: your family business is your legacy, and only one out of your three children has been involved. How do make sure that everyone is fairly treated in your will?

The business’s current valuation, the sweat equity of the involved child, and the worth of your overall estate are all relevant, here. But Davis warns about what not to do: don’t put the one involved child in a situation where decisions about the business suddenly include the passive brother or sister. Forced partnerships with inexperienced siblings never end well.

“Ideally, you’re wealthy enough to give the business to one child and assets of equal value to the others. But that’s usually not the case,” Petrecca writes.

Professional Advice is a “Lifesaver” in Complex Inheritance Plans

Lehman suggests a few options for dealing with this situation: “Issue voting and nonvoting shares so that the less-involved kids get the benefits but don’t have a say in how the company is run. Or you can give the active child a higher percentage of company ownership and equalize the estate by allocating other liquid assets to the other children.”

But Handler adds that both tactics come with pitfalls. “Passive and not-as-active children may want dividends or push to sell the business, while the active child may want to reinvest and grow the company from which they may be drawing a salary,” he says.

But again: Petrecca suggests that consulting with a professional can be “a lifesaver” in situations like this, “whether you work with a financial planner, a lawyer or a business consultant specializing in family-firm succession.”

Inheritance Time Bomb #6: Skipping Generations

The problem: your adult kids seem fine and settled, so you would rather pass your wealth to your grandchildren, instead.

“Your heartmight be in the right place, but you could be setting your kids and their children up for family strife and a bureaucratic mess,” Petrecca warns.

“If the child is a minor, at least in some states, a guardianship account may need to be opened and supervised by the courts until the child reaches the age of majority,” says Andy Arnold, CEO at financial planning firm Centerline Wealth Advisors. And this process can be cumbersome and time-consuming.

Don’t Accidentally Undermine Parental Authority

Not only that, but you might inadvertently undermine your child’s parental power. “If a grandkid knows they have money waiting in the wings from grandparents, they can snub their parents’ disciplinary process,” Hartney says.

Instead, Hartney suggests creating a trust for the grandchild and naming their parents as trustees. “This way, there’s some authority in place while the grandchild has a resource for their future,” she says.

Another approach, and Petrecca’s final note in the article, puts you in the position of wisdom and experience, leaving more than just money as your legacy. “With your children’s permission, talk to your grandkids about personal finance and charitable giving, so they can learn more about saving, investing and spending wisely,” she writes.

And Hartney agrees. While the kids may want cash, you’re giving them something more valuable: “life lessons, bonding experiences, and emotional and psychological resource-building that can serve them their entire lives,” she says.

(originally reported in AARP Magazine)