There are private family squabbles, and then there are family squabbles that splash into public view, shining a spotlight on a bitter dispute.
Take the case of Belinda Neumann-Donnelly, who sued her father, Hubert Neumann, claiming he drove down the price of Jean-Michel Basquiat’s “Flesh and Spirit,” which sold for $30.7 million at auction last May.
But Ms. Neumann-Donnelly, representing her mother’s estate, claims that it could have fetched far more, had it not been for her father’s interference. He had sued the auction house, Sotheby’s, to block the sale, an effort that she said had scared off potential buyers.
In her suit, she described her father as “the epitome of the child with rich parents who wakes up on third base and thinks he hit a triple.”
Last month, Ms. Neumann-Donnelly filed another lawsuit, this time against her father and two sisters, to try to force them to sell art held in trust, which had a value estimated to be more than $50 million.
Despite the large sums of money, the fight is a family squabble like any other, although one that played out in New York newspapers and trade publications. Most people would want to avoid such costly and destructive courtroom battles, but they are increasingly common. In fact, legal action among family members has become a booming business for lawyers who specialize in estate litigation.
“If I was mentoring a young lawyer, I’d direct him to the trust and estate litigation practice,” said Jeffrey P. Geida, the head of tax and estate planning at Weinstock Manion, a law firm in Los Angeles. “We can’t hire enough attorneys.”
One reason for the uptick in litigation, Mr. Geida said, is that blended families often divide into factions that are rife with conflicting interests.
Another reason is there is simply so much wealth now to argue over, said Amanda K. DiChello, a trusts and estates lawyer at Cozen O’Connor’s private client services practice.
The Neumann case is not an outlier, she said. “It doesn’t matter the amount of wealth,” she said. “There are plenty of cases where people will fight over $500,000 or $300,000.”
But what’s good for young lawyers building a career is not good for families that want harmony — or at least want to avoid squandering millions on legal bills.
Avoiding costly and destructive family squabbles is both straightforward and incredibly complex. Family members must be willing to put in effort that may be unpleasant and difficult.
Step one is to talk through the plan. That’s easier said than done.
“There is no magic solution to address a conflict,” said Blanche Lark Christerson, managing director at Deutsche Bank Wealth Management. “Underneath it all is the simmering resentment that ‘Mom always liked you better.’ Maybe that is true. But it’s advisable to talk someone out of this example.”
Ms. Christerson, who has three decades of experience advising wealthy families, said she had counseled parents who divided their estate unequally to discuss the reasons and the ramifications.
Often these talks are not about dividing the money as much as they are about defining a family’s values and addressing existing conflicts. Understanding that allows parents to put a plan in place, along the lines of governance principles that companies use.
“You can then say, ‘This is the contract we have as a family. God forbid, if conflict does arise, we can look back and say this is the path we should be walking down,’” said Zachary Conway, managing director of Conway Wealth Group.
Unequal divisions of estates are often just an extension of how parents treated their children while the parents were alive. But without them around to explain their actions, their children are left to create their own stories, which can deepen an existing rivalry.
When it comes to the estate itself — often a mix of cash, securities, homes and tangible objects like art, cars and collections — a lack of clear reasons for the divisions can create conflict.
Paul Karger, co-founder and managing partner of TwinFocus, which advises ultra-wealthy families, said the most difficult things to divide were what he calls troubled assets, which are so complex that they defy the capabilities of most wealth managers.
He cited the example of a billionaire who, before he died, had troubled assets, including a yacht, two jets and real estate developments that were all uncompleted. All of the assets were valuable, but the exact amounts were unknown, and his heirs did not know who was to inherit what.
“The way to guard against this is to be as detailed as possible,” Mr. Karger said. “We even suggest, where great wealth isn’t a factor, that parents have a side letter saying who gets this furniture or that clock.”
If an estate is going to be divided unequally, the heirs should know ahead of time.
In the case of the Neumann Basquiat, Ms. Neumann-Donnelly claimed in a lawsuit that her mother had written her father out of the will and left the painting to her alone. Lawyers say disinheriting someone almost always guarantees a family fight.
Dean R. Nicyper, a partner at the law firm Withers Worldwide, said parents might feel they had justifiable reasons for writing a child out of their will.
“During their lifetime, a particular event arose or there was a long time with no contact and the parent says, ‘I see no reason why I should give my child anything; he was never here for me,’ or, ‘He did something and I can’t forgive him,’” Mr. Nicyper said.
In some instances, reaching a resolution may be impossible. Selling assets held jointly may be the only solution. Ms. Neumann-Donnelly argued in her January court filing that owning the artworks with her father and sisters was no longer possible, so they should be sold and the proceeds divided evenly.
“That’s how court resolves this,” Mr. Nicyper said. “You often see this with big estates with one big piece of property. After five generations, you don’t have two people owning it, you have 40 people.”
Selling assets and splitting the money is fair in the eyes of the courts, but it often does not tamp down inflamed emotions. Often, they are family heirlooms, not securities in a portfolio.
There are legal strategies to address this, including an in terrorem, or no-contest, clause. In exchange for not suing the estate, for instance, the person who is disinherited is given a token amount that will be forfeited if a suit is filed.
Not every state allows these clauses. Florida, where some of the wealthiest Americans claim residency, does not allow in terrorem clauses. New York allows them but with caveats.
“If there’s something fishy in a will, people should be able to say that,” Ms. Christerson said. “It boils down to transparency and what you have and what your plans are.”
If parents do not lay out their wishes in complex family situations, they need to understand that litigation is a possibility.
“I always try to understand why a party is litigating a case when their position is flatly wrong,” Ms. DiChello said. “There’s always a deep history of emotion.”