Here’s a question I got a while back…
“My parents have asked me to oversee the estate planning process for our family. It could be a little tricky. You see, I have four siblings. Most of us have kids, but not all. We’ve always gotten along as a family, but I’m a little worried that tensions could arise, especially around the grandchildren. Got any suggestions for me?”
Here’s what I told him…
Most conversations about estate planning start out with two goals: (1) Avoid taxes as much as possible; and (2) Treat everyone equally.
As important as those goals might be, they aren’t exactly soul-stirring. I mean, how do you want your grandchildren to remember your final acts? “Boy, Grandpa and Grandma did an amazing job of avoiding taxes, and they were whizzes at dividing by five!”
There are far better legacies you can leave.
I once worked with a wealthy couple who had adult children, grandchildren, and even a couple of great grandchildren. Like so many others, this family got stuck on the issues of “fairness” and “equality.”
“Equality” is easy if you’re talking about money. You simply count heads and divide the cash by that number. “Share and share alike.”
But doling out property, possessions, and priceless heirlooms is a different matter. Here “fair and equal” becomes highly subjective. How do you put a valuation on a beloved item that is tied to deeply personal memories?
Case in point? This couple’s iconic lake house.
The discussion quickly escalated: “That place is worth a LOT of money.” “Sure is! That’s why it wouldn’t be fair for just one of us to get it!” “How about we sell it and split the money?” “Sell it?! The family lake house?”
We only made progress when I asked them to back up and tell me more. Thinking we were off the topic of estate planning, family members opened up. They started telling stories.
Over the next thirty minutes, I learned that through the decades this family made most of their best memories at this camp. It’s where they skied and fished and cooked out in the summer. It’s the place they went duck hunting each winter. Through laughter—and a few tears—they talked about the “togetherness” and “love” and “powerful sense of family” they experienced at this family gathering place.
Fast forward a few weeks,
Rather than a plan that would cause division, this family opted for a plan that would foster unity. They decided a family-owned Limited Liability Company (LLC) would own the waterfront land and other assets better left undivided. That called for a system of “family governance” that would “get” family members working together to reach decisions concerning land use and distribution of any profits (the family owned some farm land too).
Another family I worked with decided to create a charitable family foundation. This was a way to distribute family money to causes deemed worthy by the members. Again, a system of family governance was instituted to oversee the foundation. Talk about a win-win-win! Various nonprofits were able to help their constituents, and the family was able to bond over engaging in a worthy cause.
Obviously, when considering an LLC, a charitable family foundation, or any other kind of estate plan, you should consult appropriate tax, legal, and financial counsel.
The bottom-line? Control from the grave is nearly impossible to achieve (and rarely appreciated by the heirs). But through careful and creative planning, influence and a legacy of family values are possible with careful and creative planning. And those are better than anything else you could leave behind.
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