How Mediators Can Add Value to the Estate Planning Process

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We recently wrote about how mediators can help family business attorneys navigate the professional risks posed by disputes within family-held enterprises. The potential for family conflict is also present in many estate plans, and predictably, estate planning attorneys regularly encounter disputes between family members over inheritance, succession and related issues. Mediators can add substantial value to the estate planning process by helping estate planning lawyers prevent or resolve such disputes while mitigating attendant ethical concerns and professional risks, as discussed in a seminal 2002 article by David Gage and John Gromala entitled Mediation in Estate Planning: A Strategy for Everyone’s Benefit in the Marquette Elder’s Advisor.

Gage and Gromala begin by observing that even the most cohesive families typically have difficulty communicating about estate planning issues because such discussions touch on two sensitive topics: death and money. As Gromala notes in an earlier article (The Use of Mediation in Estate Planning: A Preemptive Strike Against Potential Litigation), most families prefer to avoid conflict, and delaying discussion of difficult subjects ostensibly preserves harmony (at least in the short term). As a result, parents’ assumptions about their adult children’s needs and preferences may not coincide with reality. Moreover, to the extent discussions occur, they are frequently vague, ambiguous, and incomplete. What parents thought they told their adult children about how they planned to divide their assets may not match what the children thought they heard.

The prevalent lack of meaningful and clear communication about estate planning issues within families tends to generate misunderstandings that seed future conflict. The problem can be difficult enough even if an estate planning attorney is dealing only with a married couple, and not their children. A husband and wife who do not have a solid relationship may have strong differences of opinion about how to handle the transfer of their assets to future generations (for example, because there are children from prior marriages, divergent charitable interests, or different promises made to different children).

But the challenge, as Gage and Gromala point out, is that spouses typically only meet with their estate planner together, and a husband or wife with concerns may not feel comfortable expressing them in the presence of their spouse. Indeed, the estate planning attorney may not even be aware that disagreements exist. But even if the attorney is aware of differences, meeting separately with each spouse is not a solution since ethical rules prevent estate planning attorneys from having separate conversations with a jointly represented spouse without disclosing the contents of those conversations to the other. That ethical constraint, generally disclosed in a “consent to joint representation” (see sample – PDF), inevitably chills candor, and thus may leave the estate planning attorney with an incomplete or erroneous picture of the couple’s situation.

The potential for conflict is obviously multiplied when there are adult children participating in the process. If there is a family business, only some of the children may be involved, but the ones who are not may still feel entitled to benefit from the business’s ongoing success because, after all, it is a “family” business. There may also be wealth or educational disparities between siblings that raise equitable considerations in terms of how assets should be distributed. Similar considerations arise when some (but not all) of the children have been heavily involved in caring for ailing parents. Further, parents may have made inconsistent promises about the division or distribution of certain assets to different children at different times. When an estate is substantial enough, each of the children may retain their own counsel to determine their legal rights and negotiate on their behalf, which of course creates an adversarial environment.

How a Mediator Addresses Conflict in the Estate Planning Process by Conferring Confidentially With Family Members and Facilitating a Collaborative Process

Bringing a mediator into the estate planning process provides estate planning attorneys with a highly effective means to clarify the needs and interests of all family members without violating ethical rules. As Gromala notes, the mediator’s utility in this regard stems from the unique advantages he brings to the table: “the mediator does not represent anyone, has no allegiance to any party, makes no decisions and has no conflicts of interest,” and accordingly “there are no constraints on the mediator’s ability to speak in confidence with each person.”

Free of the conflict of interest rules that constrain estate planning attorneys, a mediator can uncover any hidden needs and interests by communicating separately with individual family members in confidence. The confidentiality of such conversations will be protected against disclosure by agreement, and in most cases by applicable law as well. These protections virtually eliminate the risk of candor, leaving family members free to speak openly with the mediator without fear that the details of their conversations will be shared with others absent their consent.

Uniquely positioned to obtain accurate and complete information from all parties, the mediator can clear up any misunderstandings, facilitate the healing of any long simmering resentments, and work collaboratively with all family members to develop a conceptual approach about which they all feel comfortable. Like putting together the pieces of a puzzle — a metaphor incorporated into our firm’s logo — the mediator develops a comprehensive picture of the family’s situation and a holistic approach for addressing any conflicts. An estate planning attorney and other advisors can then use the results of the mediation process to develop appropriate legal structures and prepare all of the necessary documents.

Even if the mutual understandings reached do not represent everyone’s ideal outcome, the transparency of the mediation process — and perhaps most importantly, the opportunity for each family member to vent, weigh in and be heard — greatly reduces the risk of a future legal challenge. Indeed, the psychological principle of cognitive dissonance teaches that individuals are unlikely to criticize or undermine a process into which they have invested substantial time, energy and money.

In contrast, when family members are excluded from the estate planning process — and later feel cheated by what they perceive as unfair or inequitable treatment under a will or trust — anger, resentment and distrust take hold, and litigation often ensues. In turn, even after a case is resolved, the vitriol that typically accompanies litigation can permanently wreck family relationships. Airing the family’s “dirty laundry” in public may also cause lasting embarrassment.

Gage and Gromala identify the following scenarios in which mediation may prove especially useful, especially where the estate is sizeable:

• A closely held business as a family asset
• Some but not all children caring for ailing parents
• Economic or educational disparity among heirs
• Divorces and remarriages with children from prior marriages
• Different preferences regarding charitable endeavors
• Obvious signs of acrimony between spouses, and/or between parents and children
• Mentally or physically challenged parents or children requiring ongoing medical, nursing and/or home care.
• Allegations of promises concerning the distribution or division of certain possessions or other assets

In conclusion, mediation can facilitate the estate planning process by implementing a collaborative process to resolve any conflicts between family members through confidential dialogue free of ethical constraints. As compared to the litigation that may result in its absence, mediation keeps family disputes private, preserves relationships, promotes reconciliation, and lets families take control of their futures.