30 Sep What happens if my sister challenges inheritance distribution?

Q. I’m the executor for my father’s estate and I’m getting ready to distribute the assets to the beneficiaries — myself, one sister and two brothers — and close the estate. I’m afraid my sister will not be happy with her fair share and might challenge it. Do I need to keep the estate open and hold back some funds in case I have to hire an attorney?
— Concerned

A. Family fights over inheritances can get ugly.

We understand why you want to avoid any problems, if possible.

If you’re concerned about your sister filing a lawsuit over her distribution amount, then you should certainly hold funds back, said Tom Szieber, a trusts and estates attorney at Herold Law in Warren.

He said the funds could be used to pay for an attorney to represent you in your capacity as executor of the estate.

We hope you did your job as executor properly.

Among your responsibilities was to serve a notice of probate to each of the siblings within 60 days of your father’s date of death, Szieber said.

“Among other information, the notice of probate should have contained language indicating that a copy of the will was available upon request,” he said. “If the questioner did so as required by New Jersey law, he or she likely could have addressed any objections to the dispository provisions of the will early in the estate administration.”

Hopefully, you also kept detailed records of estate funds. Because a beneficiary has the right to periodic accountings, a detailed ledger showing that funds were used permissibly and distribution amounts are in accordance with the will’s provisions can reduce the chance of a successful challenge, Szieber said.

Prior to distributing assets and closing the estate, if no demand for an accounting has been made by one or more beneficiaries, you should also present the beneficiaries with a waiver of accounting. This would summarize the actions you took as executor and set forth the terms of distribution, he said.

“Assuming all beneficiaries agreed to sign the waiver, the waiver would also provide written confirmation of the beneficiaries’ approval of the questioner/executor’s actions and release him or her from liability,” he said. “If the beneficiaries all signed the waiver, then the questioner could distribute the remaining assets and effectively eliminate the risk of a legal challenge.”

Szieber said the success of a challenge to the validity of the will itself due to lack of capacity, undue influence or fraud would greatly depend on the specific set of facts involved.

Consider consulting with an attorney who can help to guide you before you make distributions.

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This story was originally published on Sept. 30, 2021.

NJMoneyHelp.com presents certain general financial planning principles and advice, but should never be viewed as a substitute for obtaining advice from a personal professional advisor who understands your unique individual circumstances.