By Friedman, Roselyn L.; Lord, Erica E.
Dispute Resolution Journal , Vol. 59, No. 4
Between 1998 and 2052, an estimated $41 trillion of wealth will be transferred in the United States as the baby-boomer generation ages and dies.1 Even after subtracting $17 trillion for estate taxes, charitable bequests, and estate settlement expenses, baby-boomers will transfer nearly $25 trillion to younger generations. Some of this wealth will be transferred amicably, according to predictable and well-craffed estate plans. Other wealth transfers, however, will be contrary to the expectations of the baby-boomer's children and grandchildren, breeding conflict and generating trust and estate litigation.
We believe that mediating troublesome issues in conjunction with the estate planning process can help to curb the growth of trust and estate litigation. Mediation is a form of dispute resolution particularly well-suited to resolving and even avoiding conflicts over family wealth transfers. The estate planning process often focuses heavily on transfer tax minimization, while failing to fully address sensitive non-tax considerations underlying family dynamics. The use of mediation early in the estate planning process can provide a forum for airing these issues and finding creative solutions to meet the parties' needs.
This article discusses the role that mediation can play in the estate planning process in resolving disputes which might otherwise result in litigation.
The Changing Nature of the Estate Planning Practice
The use of mediation in estate planning is still relatively new. This is likely to change, however, as litigation over trusts and estates and other wealth transfers becomes more common and more costly. This change would be a welcome development.
Historically, litigation over wealth transfers was not of the greatest concern to trusts and estates attorneys. It was customary for these attorneys to represent an entire family, including members of different generations, as well as the family business or farm. As a result, the attorney was able to gain the trust of the family as a whole and understand the group dynamics. When disputes arose, the attorney could informally facilitate family settlements and deal with personal, as well as financial issues, in Grafting an estate plan.
Changing times and circumstances have greatly affected the estate planning practice and the attorney-client relationship. Due to the rules of professional responsibility, trusts and estates attorneys may not be able to represent multiple generations of a family (or even a husband and wife) unless the parties waive potential conflicts or retain separate counsel to represent them when their interests conflict.2 These constraints interfere with the attorney's ability to facilitate family settlements unless all the parties retain separate counsel. Such a situation, where there may be as many attorneys as family members, rarely creates an optimum atmosphere for reconciliation and resolution of sensitive non-legal issues.
Moreover, as society has become increasingly litigious, lawsuits among family members are no longer considered unusual or even discouraged. Previously, when family members were displeased over an inheritance, the matter was most often settled within the family domain; today such a disagreement may end up as the subject of a complaint filed with the court and a matter of public record. As one commentator noted, the act of serving a detailed complaint and answer publicly exposes sensitive family matters and "significantly stokes the parties' emotional 'thermostat.'"3
Reasons for Introducing Mediation into the Estate Planning Process
We believe there are a number of reasons why mediation is a better way to resolve disputes over wealth transfers. We recommend the "facultative" or problem-solving approach to mediation. This is in direct contrast to the adversarial or judgmental approach of a traditional litigation settlement.5 Unlike litigation, mediation has a neutral thirdparty mediator who facilitates discussions with the parties and helps them to achieve their own solutions. …