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How to avoid succession disputes?

Succession is a difficult topic and many people tend to avoid it, but talking about it is important.

Where to start?

A simple advice could be: succession should be discussed openly. However, talking about succession is often difficult and in too many families succession and the division of assets during life or in the event of death are taboo. The purpose of this article is to reiterate the advice that succession is best discussed openly, while also offering suggestions on how to make the conversation easier.

Why is it good to talk about succession?

Let’s start with a real-life example where inheritance became a curse, especially for the relations between heirs: in order to divide the estate between his three children and his wife, the deceased made a will in good faith. He even stipulated that each of the children should receive a bull or its equivalent, so that none of them would be deprived. The testator seems to have acted with care and his descendants will easily divide the inheritance.

The deceased died in the 1990s. Before the succession proceedings began, the descendants of the first bull were baked together. However, during the succession proceedings, everything became disputed between the heirs – the value of the estate, the value of the gifts and the value of the bull were assessed by valuers and experts, the first succession order was not issued until eight years after the deceased’s death, and the succession proceedings were finally closed 20 years later. At that time, there were no bulls left on the farm, and even if there had been, the heirs would certainly no longer have roasted them together.

In the case described above, some of the heirs felt disadvantaged by the will and by the gifts made during their lifetime. They left it to the court to decide. I believe that, in the end, they were all unhappy with the court’s decision.

Dissatisfaction because of misunderstanding of the will

Even if heirs do not get involved in lengthy court proceedings to enforce their rights, wills and succession can still have a negative impact on their relationships with each other. While they respect the testator’s last will, they feel deprived. They usually feel this way when they do not understand the reasons why the testator has chosen to make such a division.

Too often, the heirs only become aware of the contents of the will after the death of the deceased. This can lead to heirs not understanding the will or the division not being in their interests. They direct their anger at the deceased against the remaining heirs and relations between them deteriorate.

Heirs as co-owners

Even if the testators do not want to cause discord among the heirs by making a will and decide that they should inherit as provided for by law (legal succession), in practice disputes arise which have a negative impact on family relations.

The main characteristic of intestate succession is that the estate is divided according to the shares inherited. This means that each heir receives a certain proportionate share in all the assets of the estate: all the heirs become co-owners of immovable property, as well as co-owners of shares, stakes in companies and other assets. The heirs must then agree how to manage these assets together or how to divide the estate by a succession agreement. If there is a dispute between the heirs after the death of the deceased, the estate is usually not managed optimally and its value decreases.

The heirs can, however, request a judicial division, which is again time-consuming. Partition is also carried out according to the law and does not take into account the interests of the individuals.

Inheritance of shares in companies

Special mention should also be made of the succession to shares in companies. Shares in companies – like the rest of the deceased’s assets – are deemed to pass to the heirs at the time of the deceased’s death.

However, if there is a dispute as to who is the heir or in what share and which of the heirs inherits, the company may be without an active shareholder while the conflicts between the heirs are being resolved. If we consider the situation that the deceased was also a director of the company, such a situation would completely cripple and render the company’s functioning impossible.

Conversation – the way to understanding wishes

All of this suggests that it is sensible to discuss succession. In discussions on succession, it is often more important to pay attention to the manner of communication than to the substance of the division. It is a good idea to first establish what each individual’s interests are and how the descendants envisage their lives, and then work together to find an appropriate way of sharing.

Let us imagine a school example of a gentleman who has one orange and wants to divide it between his two daughters. He would divide the orange fairly into equal halves. However, both daughters would be dissatisfied because one wanted the pith of the orange to make juice and the other wanted the peel to bake a cake. By talking to them and asking the right questions, the master could find out what each of their interests were and divide the orange differently.

In order to ensure that the estate continues to be managed successfully and to avoid conflict between the heirs, the interests of the heirs must be taken into account in the division, with due regard for their feelings.

Involvement of a neutral person

When relationships are too complex, when emotions are too strong or when we are not able to identify the interests ourselves, it makes sense to involve a third, neutral person in the discussions to guide the process in a structured way and to positively influence the question of the division of the succession and the search for an agreement that works for everyone. A structured discussion can be led by lawyers, perhaps even better by mediators (mediation is also available through the Mediation Centre of the Slovenian Bar Association) or lawyers with mediation skills, who can steer the discussion and the division of assets well so as to ensure both the continuation of good family relations and the good management of the assets in the future.