The CPA Journal

Mediation in Estate Planning and Will or Trust Contests

By John A. Gromala

Using an independent mediator during the estate planning process and during will and trust contests can reduce the probability of family litigation, improve the parties’ satisfaction, and avoid malpractice claims. Mediation in the early stages of disputes over the distribution of estates and trusts can save money for beneficiaries and preserve amicable relationships. The goal of retaining a mediator in estate planning is to prevent a future problem rather than solve an existing dispute. If there is current conflict among family members, mediation offers a solution that includes reconciliation. Although this article will focus on the family dynamics relevant to estate planning and distribution, the same anxieties are present when planning conservatorships, guardianships, powers of attorney, and prenuptial and postnuptial agreements.

Conflicting Needs and Conflicts of Interest

It is dangerous to make assumptions at the start of the planning process. For example, a happily married couple might not have communicated about the division of their estate, or a prospective couple might not have discussed the terms of a prenuptial agreement at arm’s length. People are often reluctant to raise sensitive topics within a close relationship. They avoid conflict to preserve ostensible harmony. Unfortunately, glossing over a problem today invariably spawns greater conflict tomorrow.

The data that individuals give to their accountants and attorneys are usually comprehensive and accurate, but their hidden interests and suppressed needs are seldom fully disclosed. The usual dynamic when representing clients with potential conflicts of interest may interfere with obtaining all the information required to determine their real interests and needs. For example, one spouse usually will not raise an issue known to be distasteful to the other in the other’s presence, effectively concealing concerns from the professional. Couples engaged to be married often view a prenuptial agreement through rose-colored glasses that obfuscate their prior assumptions. Similarly, parents may make assumptions concerning their adult children’s desires that have little relation to actual needs or are based solely on emotion. This could result in an estate plan based, in part, on flawed assumptions. Such oversights can result in future litigation and malpractice claims.

The Mediator’s Role

A mediator recognizes the roles of accountants and attorneys and does not question their advice. The mediator’s role is to assist the planners in drafting a plan that will accomplish the testamentary desires of the clients. The mediator confers confidentially with each person and with the parties jointly. Only authorized information is shared with the other parties. The mediation process can provide accountants and attorneys with valuable information about the parties’ subjective interests and needs that should be addressed in the estate plan or the settling of a will contest.

A mediator explains the process to each person. Joint meetings and individual conferences are scheduled as appropriate. Other individuals might be interviewed with the approval of the parties and their advisors. The mediator helps the parties face and resolve important personal issues that would otherwise not be disclosed to, and addressed by, their advisors. Mediation assists the advisors in collecting all pieces of the family puzzle.

A mediator does not need to be an expert in estate planning, but does need to be familiar with its basic principles and terminology. Expertise in the mediation process and the unique ability to communicate with all the individuals involved in the process makes the mediator a valuable member of the estate planning team and settlement conference. The mediator helps the parties bring conflicting interests to the surface and resolve them; the mediator does not give advice. Mediation builds on latent goodwill. It is a means of transforming disparate messages into a meaningful collage.

Family Relations

Control and succession in a family business are explosive issues if not properly addressed early on. A child working in the family business may have expectations that have not been discussed with parents or siblings. The child’s spouse may expect even more. In addition, a child who provides years of care for a sick parent may expect a larger share of the estate. Multiple marriages and sets of children inject many additional issues. All of these scenarios pose a high potential for litigation, which can be avoided through early mediation during estate planning and will contests.

Mediation increases the probability of full disclosure, because each individual can speak with the mediator in strict confidence. A mediator can help all parties and their advisors find hidden issues. The nature of family relations can foster hidden agendas and suppressed emotions. Poor communications and misconceptions may cause people of goodwill to become antagonists. If not addressed, hidden issues can explode later on. Mediation can expedite the estate planning and settlement processes. It helps eliminate the foot-dragging of a family member who, to avoid being seen as an obstructionist, hides their opposition to a proposal.

Conflicts of Interest

Whenever a potential conflict of interest requires separate counsel or a “consent to joint representation,” clients should be advised about the benefits of a skilled mediator. The mediator’s work may dispel or confirm and resolve the conflict. In any case, a mediator will help planners identify underlying emotional issues and address the family’s spectrum of concerns.

Mediation works well in resolving problems during probate and trust administration. Relationships between executors or trustees and beneficiaries can turn sour because each have different priorities. These differences are often in perception rather than substance. A mediator can help the parties resolve ambiguity and develop a plan of interaction that will promote all of their interests.

Courts are not charged with working out reasonable solutions to heirship contests or disputes over administration of wills and trusts. Judges listen to testimony and make decisions. The results might not provide relief to any party. Rather than attempting to find fault, mediation works toward a solution that benefits everyone.

Mediation in conflict resolution is a profession in its adolescence; mediation in estate planning is in its infancy. CPAs are in a unique position to promote the financial and emotional benefits of mediation in estate planning and will contests. Clients that have the benefits of mediation will be more satisfied and less likely to bring a malpractice claim. The use of a mediator will help ensure a result that is equitable, realistic, and acceptable to all parties.

John A. Gromala has served on the executive committee of the California Bar’s section on estate planning, trusts, and probate law and as a fellow in the American College of Trust and Estate Counsel. He is a lecturer in conflict resolution at Humboldt State University and has trained mediators and attorneys in the United States and Europe.

Editor:
Phillip Zimmerman , CPA
Mediator and Arbitrator

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The CPA Journal is broadly recognized as an outstanding, technical-refereed publication aimed at public practitioners, management, educators, and other accounting professionals. It is edited by CPAs for CPAs. Our goal is to provide CPAs and other accounting professionals with the information and news to enable them to be successful accountants, managers, and executives in today's practice environments.

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