Having “The Conversation” with your Family
There is an increasing amount of litigation at worst and family disharmony at best when it comes to carrying out the estate planning directions of parents.
- There are fights over the division of personal property
- There are fights over the division of the money
- Family cottages become a matter of conflict instead of joy
- Family businesses disintegrate becoming worthless
- There is bickering over running the family farm
Why is there so much discord? It really boils down to one central issue – the parents do not have “the conversation” with their family concerning the division of their estate and their outlook on the future use of their assets.
This is a difficult subject because there are many who were raised in an era when these were not issues that were discussed with the family. They may not believe that their estate plan is any of their children’s business. While the right of parents’ privacy is important – this approach leads to the problems outlined above.
Personal Property. If you do not ask your children what they want, you may be unaware that several desire the same items. Therefore, when you state in your Will or Trust that the personal property is to be divided equally among the children, it is a recipe for disaster.
The flip side of this coin is that items you treasure may not be wanted by your children, grandchildren or other family members. Leaving them items they don’t desire will only make them feel guilty or resentful.
Money. If you are not dividing your monetary assets equally, let your family know in advance. If your children are not saving for their retirement because they believe that they will inherit substantial sums, but you are not leaving them substantial sums, they should be put on notice now.
If you have made loans to one of your children, commit this to writing and address it in your estate plan. Will the loan be forgiven at your death if it remains unpaid? Or will it become an advance upon that child’s share?
Family Cottages. Your memories of all the happy times you spent at the cottage with your children may not be shared by them. You want them to keep the cottage so that it will provide wonderful summer memories for them and their children. Have “the conversation” – ask them if they want to keep it.
It may be that some do not want the cost and responsibility of a vacation property far from their home. They may not be able to afford their fair share of the cost. They might not want to take their annual family vacation at the same place every year, yet if their share of the cost and upkeep consumes their vacation budget, they may not have any choice.
Family Businesses. Have you made a plan for your retirement from the business? Who will continue to operate your business? You may assume that since your children have worked there in the past that they would be happy to come home and run the business. This may not be a part of their plan.
If one of them is working in the business, have you put together a plan for them taking over the management and operation? Have you taught them all they need to know by giving them more and more responsibility? If you haven’t, they may be ill prepared to operate the business. It is possible that they are happy to work there but don’t want the responsibility of owning and managing the company. Again, you don’t know if you don’t ask – have “the conversation”.
If you have more than one child, how will passing on the business work? Are they all to be equal owners? If some work the business and other do not, this will be another recipe for disaster. Alternatively, if one child is given the business to own, are there sufficient assets for the others?
Family Farm. Many of the same observations concerning the family business apply to the family farm. Additionally, remember that the children living in proximity to the family farm may assist you on weekends and at critical times each year, not because they love the farm, but because they love you. They know that it has become more difficult to get all of the work done as you have gotten older so they frequently give you assistance.
It important to have “the conversation” with them. Do they really want the farm? Is it a part of their plan to operate it?
Finally, when having “the conversation” try to be open to your children’s opinions and feelings. Allow them a guilt-free environment to really tell you how they feel about these issues. Try to be non-judgmental if they do not want certain assets or businesses. By knowing where your family stands on these issues, you can craft an estate plan that will peaceably and smoothly transfer your wealth and property to your family when you pass away.
Avoid the litigation, the family squabbles and the possible splintering of your future generations over your estate – have “the conversation”.