Introduction
Use of an independent mediator during the planning process
can help estate planners improve client satisfaction, reduce the
probability of family litigation and avoid malpractice claims.
The goal of retaining a mediator in estate planning is to prevent
a future problem rather than to solve an existing dispute. If
there is current conflict among family members, only mediation
offers the probability of a solution that includes reconciliation. This article will focus primarily on family dynamics involved in planning and preparation of wills and trusts. The same
anxieties are present when planning conservatorships, guardianships, powers of attorney (financial & health), prenuptial and
postnuptial agreements.
My experience in mediating will and trust contests, and
disputes during administration of wills and trusts, indicates
that clients’ failure to disclose seemingly unimportant,
embarrassing or confidential information during the planning
stage requires their estate planners to work with incomplete
and/or erroneous family information. Occasionally potential
clients who discuss estate planning with an attorney do not
return. While the attorney may think the people went to another
professional, they may have simply made a passive decision to
ignore the complex emotional issues raised during the initial
interview.
Most planning cases will not include heirs as active
participants. However, it is dangerous to assume that a
“happily married” couple is communicating well about the
division of their estate. It is even more dangerous to assume a
couple about to be married has discussed the terms of a
prenuptial agreement at arms length. Persons with close
relationships may have a great reluctance to bring up sensitive
topics between or among themselves. Multiple marriages inject
many additional issues. Avoidance of conflict by ignoring it is
considered a virtue by many people. They gloss over sensitive
areas to preserve ostensible harmony. Unfortunately, glossing
over a problem today invariably spawns a greater conflict
tomorrow.
A mediator does not represent anyone, has no allegiance to
any party, gives no advice, makes no decisions and has no
conflicts of interest. There are no constraints on the
mediator’s ability to speak in confidence with each person.
Example
Let me share an example where attorneys brought in a
mediator. A family with an eight figure estate and several adult
children had labored through two years of planning. The parents
sought input from their family since each child had considerable
financial expertise and a substantial estate. The parents and
each child retained and conferred with their own experts
(attorneys, accountants and financial advisors). The experts
corresponded among themselves and their proposals were circulated
among the family. Everyone understood the concepts being
presented. Each attorney spent much time with her or his client,
and family members had many conferences, but the family was not
communicating effectively.
By the time a mediator was retained, the family was close to
open warfare. Each family member suspected the others of
conniving to gain advantage. This suspicion was within and
between generations and was affecting spousal relations. The
proposed plans had great technical merit as regards tax minimization, but the lines of communication between and among attorneys
and clients (dictated by conflict rules) did not provide a
vehicle for the family members’ real interests to become known to
each other and their advisors. As a result, each professional
was working with pieces of a different puzzle. They were unable
to put the pieces together since each had a different concept of
how the final picture should look. Spouses and siblings had
“non-monetary” needs that were either obfuscated or couched in
“dollar” demands. Satisfying the dollar demand failed to satisfy
the emotional need.
One such hidden issue involved a family business run by the
father with considerable help from his youngest son, Bob. The
father wanted to recognize Bob’s contribution by giving the
enterprise to him. Bob hated the business, wanted no part of it,
but never told his father because of the great sentimental value
his father attached to it. The business was taking too much of
Bob’s time, to the detriment of his own business and his
relations with his wife and children. The father was continuing
the business because he believed Bob loved it and would want to
inherit it. He had absolutely no emotional ties to the business.
Once father and son could discuss the issue the solution was self
evident.
Within three months the mediator forwarded to the attorneys
a memorandum of understanding signed by all family members. By
communicating with everyone on an individual basis, in small
groups and in the large family group the mediator was able to
develop a complete picture of the family’s needs. After
conferring with his clients and their accountants the parents’
attorney prepared documents for an estate plan that satisfied the
desires, interests and needs of the entire family.
Confidentiality
Most jurisdictions provide broad protection to mediation
proceedings including prohibiting the mediator from testifying if
there is subsequent litigation. Oral and written admissions,
offers, notes, etc. made during mediation cannot be used in
litigation. California has codified the confidential nature of
mediation proceedings in CCP 1775 et. seq. and Evidence Code
sections 703.5, 1152.5, 1152.6. Most mediators describe the
bounds of confidentiality in a mediation agreement. There is no
risk to the parties participating in mediation, whether it be in
the planning stages or in a contested proceeding. They maintain
control over their destiny by participating in the mediation
process.
Conflicting Needs and Conflicts of Interest
The statistical data clients give to their attorneys are
usually comprehensive and accurate, but hidden interests and
suppressed emotional needs of clients are seldom fully disclosed
in the presence of one another. The accepted mode of
representing clients with potential conflicts of interest may
interfere with an attorney’s ability to get all the information
required to determine a client’s 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. People about
to be married are often in a state of euphoria, and they may view
a prenuptial agreement through “rose colored glasses.” Each one
may have an understanding based on a different perspective. In
like manner parents may make assumptions concerning their adult
children’s desires that have little relation to their children’s
actual needs. Children may make assumptions about each other and
their parents based on emotion. This could result in a plan,
based in part, on flawed assumptions. Such an oversight could
result in future litigation and may be the basis for a
malpractice claim.
Prior to the era of specialization and stringent conflict
rules, much estate planning was done by attorneys who knew their
clients and families. Like the “family doctor,” the attorney was
aware of the family’s trials, tribulations, successes and
failures. In that climate it was common for attorneys to counsel
spouses without discussing the possibility of a conflict of
interest. The primary focus was on preparing a plan satisfactory
to both, through an in-depth interview with both spouses.
Today, many families have children who are the issue of more
than one marriage or relationship and this creates the potential
for conflicts of interest. How can a fair plan be developed?
Equal is not always equitable. Each family’s history, interests
and needs, as well as assets and taxes, must be considered when
designing a plan for their future.
The probability of a conflict of interest is present in many
estate plans. Often, spouses are advised to have separate
attorneys; individual financial advisors may be recommended. If
they decline separate counsel they may be required to sign a
“consent to joint representation.” Either choice makes married
couples uneasy because they do not see themselves as adversaries.
The emphasis on differences may cause new or additional stress in
the marriage. It can also cause them to abort the estate
planning process.
Having a “consent to joint representation” or suggesting
separate attorneys may satisfy ethical requirements (and concern
over malpractice exposure) without satisfying the real need of
clients for a plan that satisfies their joint desires. This need
may be lost when each party communicates through a different
lawyer and is suppressed if using the same counselor. If the
clients elect to use the same attorney, he or she cannot have
separate confidential discussions with each of them. Use of a
mediator provides the attorney with a way to be professionally
ethical without sacrificing the clarity that is achieved when one
person has separate discussions with each interested party.
Role of Mediator
A mediator recognizes the attorney’s lead role and will not
question the advice given by an attorney. The mediator’s role is
to assist attorneys in fulfilling their responsibility to craft a
plan that will accomplish the testamentary desires of the
attorneys’ clients. The mediator confers, on a confidential
basis, with each person separately and with the parties jointly.
Only information that is authorized to be disclosed by each
person will be shared with others. The mediation process can
provide attorneys, accountants and financial advisors with
valuable information about the clients’ subjective interests and
needs that should be addressed in the estate plan.
A mediator explains the process to each spouse. Joint
meetings and individual conferences are scheduled as appropriate.
Others are interviewed only with client and attorney approval.
The mediator helps the parties face and resolve important
subjective issues that otherwise would continue to fester because
they were not disclosed to, and thus not addressed by, the
attorneys. Mediation assists the attorneys in collecting all
segments 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 talk with each person, in confidence, makes the
mediator a valuable member of the estate planning team. The
mediator helps the parties bring conflicting interests to the
surface and helps to resolve them; a mediator does not give
advice. Mediation builds on latent goodwill. It is the catalyst
used to transform disparate messages into a meaningful collage.
The estate planners use their expertise to integrate this
information with other data in developing the plan.
Many people mistakenly think of a “mediator” as an
arbitrator. Attorneys should explain to their clients that a
mediator is a facilitator, not a fact finder or decision maker.
The mediator helps the parties peel off emotional overlays and
accept reality. None of the planning professionals (attorneys,
accountants and financial advisors) can fill the need to speak
separately and confidentially with each interested party.
Complexities of Family Relations
The number of family members and advisors participating in
the example cited earlier created an unusually complex case.
However, the family dynamics in less complicated situations are
very similar. For example, 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.
Control and succession in a family business are issues waiting to
explode if not properly addressed early on. Also, a child who
provides years of care for a sick parent may expect a larger
share of the estate. Property acquired and children born during
multiple marriages inject many additional issues. These are only
a few examples that pose a high potential for litigation which
can be avoided through early mediation.
The emotional issues present in a family owned or a closely
held business create the climate for litigation after death of
the entrepreneur or partner. These issues are often ignored or
minimized by the spouses and partners during estate planning.
Clients with such illiquid assets need assistance from mediation
during estate planning, and certainly after the death of the
testator or trustor if the problems were not addressed during the
planning phase.
Mediation during the planning stage may help spouses to
discuss sensitive areas and to avoid future conflict. It can
increase the probability of full disclosure since each person
knows he or she can speak with the mediator in strict confidence.
A mediator can help all parties and their advisors find
hidden issues. It is often difficult for one spouse or sibling
to explain the interests and needs of others. The nature of
family relations can foster many hidden agendas and suppressed
emotions. Poor communications and misconceptions may cause
people of goodwill to become antagonists. If not addressed,
hidden issues can become buried mines waiting to explode.
Mediation can expedite the estate planning process. It helps to
eliminate the need for foot dragging by a family member who
cannot live with a proposal but does not want to be seen as an
obstructionist.
Need For Mediation
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 either case, a mediator will help planners identify underlying
emotional issues so they can better address the family’s spectrum
of concerns. Even if a conflict of interest is not apparent, a
mediator may be advisable in large estates. The mediator might
uncover a latent conflict or bring out information that will
prevent a conflict from developing. The attorneys, invariably,
will receive information through mediation that will be
beneficial in developing a viable plan. At the very least, the
attorneys will have a better record that their advice and plan
documents correctly address the desire of their clients.
Mediation also works well in resolving problems during
Probate and Trust administration. Relations between executors or
trustees and beneficiaries can turn sour because of different
priorities. Often differences are in perception rather than substance. A mediator can help the parties clear up areas of
ambiguity and aid them in developing a plan of interaction that
will promote all their interests. As a result executors and
trustees may no longer dread the beneficiaries’ phone calls and
beneficiaries may be happier while making fewer calls to the
fiduciaries.
Courts are not charged with working out reasonable solutions
to heirship contests or disputes over administration of wills and
trusts. Judges listen to scripted testimony and make decisions.
The results may be cumbersome, with little relief to any party.
If the goal is a solution rather than a finding of fault, mediation is the best means to achieve the goal.
Conclusion
The services of a mediator should be considered if any of
the following scenarios are present:
Mediation in conflict resolution is a profession in its
adolescence. Mediation in estate planning is in its infancy.
During the past decade trial lawyers have recognized the
important role mediation can have in providing a better service
for their clients. It is time for the Estate Planning Bar to
consider recommending professional mediators as part of the scope
and quality of service they offer their clients. Estate planners
have an opportunity to help estate planning mediation develop in
a manner most useful to clients and professionals. Dialogue
between estate planners and mediators as well as continuing
education seminars focusing on mediation in estate planning
should be a high priority.
Attorneys, whose clients have the benefit of mediation, will
have more satisfied clients and a reduced risk of malpractice
claims. Failure to use a mediator may increase the probability
of criticism, misunderstanding and future litigation. The use of
a mediator will help to assure a result that is equitable,
realistic and acceptable to the key parties, be it estate
planning or settlement.
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