Why have a family meeting?
Everyone has faced situations that seem too emotionally draining or projects that are complex and laborious – both of which are easy to put off until another day. It’s human nature. We find this is often the case when clients are reviewing their estate plans and considering whether to talk with their heirs about their intentions. Sometimes when a family meeting is suggested, we hear, “Why do we need to do this?” or “I won’t be here; they can sort things out after I’m gone,” or “I’d rather my children didn’t know.”
We tend to feel more at ease once we understand why things have been established in a certain way. Your family’s understanding of your wealth transfer plan, likewise, can translate to a more harmonious and successful transition for all involved.
Perhaps your assets will flow into irrevocable trusts to protect heirs for their lifetimes. Perhaps your estate plan was drafted to minimize taxes and maximize the ultimate payouts to beneficiaries and charities. You may have designed a trust to protect inherited assets in case a family member divorces or remarries. There are numerous scenarios that, when explained at the family meeting, can ease tensions and prepare the next generation for success.
Whether or not you disclose the amount of your estate, having the conversation now, in advance of you or a spouse passing, generally assures a smoother transfer of family assets. Often your estate planning attorney is at this meeting explaining the plan and spelling it out with flowcharts and graphics. These meetings provide children with the opportunity to ask questions, gain clarification about expectations, and seek guidance about how to manage the inheritance. Learning your children’s views and wishes related to various assets in your estate, even years in advance, can be valuable as well.
A critical part of the family meeting entails discussing with your children Successor Trustee responsibilities and the duties of a Personal Representative (PR) in settling an estate. Being named trustee or PR as an individual is not an award. Rather it is a somber role that requires significant knowledge and oversight and can expose the individual to personal financial liability. Trustee roles and responsibilities include management and investment of all the assets, accounting procedures, bill paying, making disbursements to family members for years, compliance, and tax reporting. Once family members understand the many duties and requirements of these roles, they will often redirect that burden to a corporate trustee or arrange for a corporate co-trustee.
A family meeting is a comfortable, effective forum to introduce your estate plan and the vision that brought you to this point. It is an opportunity to bring your children and other family members into the process of preparing for inherited wealth that could substantially change their lives.
Robin L. Cook is executive vice president and wealth services advisor for The Sanibel Captiva Trust Company.