General Patton was once famously quoted “When everyone is thinking the same thing, then somebody’s not thinking!” How many times have you been in a meeting or in a conversation where no one seems to disagree? It seems as if everyone is afraid to say what they really think. The action plan out of those types of meetings is usually something less than satisfactory, isn’t it?
Using my field as an example, I’ll sit down with a couple to discuss their estate plan. Rather than get right to the point and ask how they want their will or trust to read, I like to ask them questions about themselves and their family. If the client is retired, I’ll usually ask what they did when they were working. How many children do you have? Tell me about your children and so on.
To do otherwise – simply ask how to divide their possessions – invites problems. “Just divide everything equally amongst our children after both of us are gone” is a common direction – that could lead to big issues.
Once I was having a very interesting conversation with new clients, spending more than forty five minutes on their history, on their children and even their grandchildren. The husband suddenly stopped and asked me why I was spending so much time trying to learn about the family members’ personalities.
“If I don’t know this information, how might I help you fashion an estate plan that’s going to work for you?” I answered.
Let me give you an example. Suppose Chadwick has built up a family business over the course of many years. The equity and value in the family business makes up a large chunk of Chadwick’s net worth. Let’s further assume that Chadwick has three children, only one of whom works in the family business. Let’s also say that during our conversations, Chadwick tells me that there is some acrimony between the son who works in the family business and another son who does not.
If Chadwick’s will simply divides up his net worth amongst his three children, what problems might occur? For one thing, the son who inherits his 1/3 share of Chadwick’s business but is the one responsible for working the business might resent the fact that his work benefits his two siblings who do nothing but sit back and wait for dividend checks.
On the other hand, the siblings who don’t work might complain that the son who is working the business isn’t running it correctly, or is spending too much on his own salary which decreases the amount of dividend checks that they receive.
Eventually the hard feelings will multiply and may even fracture family relationships. There are alternatives for the client who has net worth tied up in a difficult to divide, illiquid asset. You could have the personal representative sell the asset to a third party, you could write your documents to give a child who is working in the business the option to purchase the equity interest from his siblings at a price and on terms that won’t bankrupt the business, you could purchase life insurance and name disproportionate beneficiaries to work out the difference and so on.
But in working on an estate plan you would only arrive at these solutions if you can first get everyone thinking something different than what is rote. You have to think “outside the box” as they say.
You might say that planning this way might lead to difficult conversations and disagreements. And it might. But as General Patton figured out – it’s okay to have disagreements during the planning stage. What every family doesn’t want is to have disagreements once it’s too late.
