Putting Together a Family Settlement Agreement the Easy Way
Many problems can arise during the reading of a will if family members believe they’re not getting what they deserve. A family settlement agreement can be helpful in such scenarios, and we’ll explain how you can benefit from one, how to draw it up, and what clauses to include!
A group of heirs must sit down and discuss the family settlement agreement. This legal document will establish how to handle the distribution of the inheritance. The family settlement agreement is often used when a will is poorly written and/or considered unfair. Although distributing the wealth is the main goal of the settlement agreement, it also helps the family members keep a straightforward relationship with each other.
A family settlement agreement should include:
- Names of the family members involved
- A list of property items
- Details of the property addresses
- Distribution terms
A family settlement agreement is usually created outside the courtroom and negotiated between the family members and their lawyers.
Like any contract, a family settlement agreement has its pros and cons. Here are some of them:
|The ability to circumvent a poorly written will||All heirs must participate in the agreement. If one heir decides not to, the other heirs won’t be able to overrule his or her rights|
|The process is fast and simple, and it doesn’t require any significant legal hoops||Although the process is fast, if one heir decides not to take part in the agreement, it will prolong the procedure|
|The court can’t disapprove the family settlement agreement||There can be potential gift tax implications for the property willed to you. If, for example, a widow gets her late husband’s house and decides to split it with several children, she may owe gift taxes for the house transfer. The person receiving the donation doesn’t have to be responsible for paying the property taxes—that responsibility can also stay with the donor|
The terms presented in your family settlement agreement might not be what you expected. In some situations:
- You don’t get everything that the deceased promised you
- The amount you’re getting isn’t the same as what was stated in the will
- You won’t receive the fair share of the property you’re entitled to
- The amount you’re getting doesn’t seem fair, considering your relationship with the deceased
- You believe someone else is getting more than they are entitled to
This document is not perfect. Signing one is especially tough in case family members don’t get along. If one member doesn’t agree with the terms, that can invalidate the entire document. Negotiations can go on for a long time until everyone is happy with the terms.
The family settlement agreement should state that the:
- Signing of the document ends all disputes regarding the family property
- Entire document has been read and accepted in its entirety by every signer
- Document is final and conclusive and can’t be changed by future claims in court
- Parties will all be present for the notarization of the document
- Previous owner of the properties subject to this agreement cannot be held responsible for any claim regarding the property
- Parties consent to execute the agreement by their own will
By signing the family settlement agreement, all parties involved confirm that they agree to these terms.
Family settlement agreements are sensitive documents that have to be written carefully. You can write the agreement yourself, but the legal terms can be complicated for someone who has no background in law.
Hiring a lawyer to help draw up or review your agreement would be the best course of action, but keep in mind that they can be quite pricey.
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