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If you are like me, you dread the idea of imagining your family moving on without you after you’re gone. And if you are like me, you nonetheless want to continue to provide guidance and a good life path for your family and loved ones even after death and leave this life for them as well as you possibly can.
Unfortunately, these good intentions are often complicated by reality. In the estate planning process, emotions and dysfunctional family dynamics can rear their ugly heads, and before you know it, you’re left with awkward silences at the Thanksgiving dinner table.
Need some examples of situations you may not have considered may happen? Below are a few case studies from my time in the financial services industry.
Two Do More Than One
I recently met with a long-term client who lost his wife to a sudden and tragic disease. She was the family glue and her loss was stunning to him and his grown children. He had to step into the role of family shepherd quickly, and he has since done an amazing job of being a wonderful father and grandfather. However, as he has aged, he has begun to need care himself. Two of his children have really stepped up and provided that care; the other one: not so much.
He loves his children equally, but he feels very strongly that he should leave the children that are providing care for him the lion share of any residual estate and not equally to all three as his current plan states. Since I know the family dynamic well, I knew that this was not a good idea: he would be leaving behind a world of resentment and hurt between the siblings. Not only would they have to deal with it, but so would their children–it will be discussed at every holiday meal and get together for years, if not generations, to come.
Children in Different Financial Situations
Another client has children who are in very different economic circumstances from each other. The mother is very well off and loves her children equally, but would like to acknowledge that one or two might need more from her estate than the others. But, again, she is worried about sending the wrong message in her estate plan, and is picturing the “reading” of her will where she is leaving less to some than others. What will they think of her? How will that affect the family dynamic?
In another client meeting, we were discussing the couple’s children. They are all amazing and grown with terrific, successful lives of their own. The oldest is used to running the show when the siblings get together and assumes that she will be the one named as executor, the one they give Powers of Health and other powers to–but guess what? That’s not at all what they want to do! She’s a bit bossy, she’s very busy, and they are worried that she won’t have time to do the work and won’t reach out to siblings for help. Instead, she’d just power her way through as she does for everything, creating a lot of hurt, frustration and ill-will between the siblings. Their question to me: what should they do?
Let’s tackle these cases one-by-one and discuss options.
Situation one: In the first case, my client is still fairly young, and although he needs increasing care, he is expected to live a long life. Because he has the means to do some gifting while he’s alive, I suggested that we carefully review his financial situation annually, and he can quietly gift more each year to the children who are providing his care than to the other who is not. Those who are providing his care have children, which the other does not, so another option is to gift money to the grandchildren to help out the parents. If it appears that there really aren’t enough assets available safely during his life to do impactful gifting such as he has in mind, another way to approach this could be to reach out to his estate planning attorney and rewrite his will so that he carves out an amount to each of his two children who are helping him and calling it a “reimbursement for costs and time incurred in my care”–however the attorney feels would be the best wording–so that the other sibling understands that the love is equal, but that the time put in was not.
Situation two: In the second scenario, if ever there were a situation screaming for communication, this is it. I suggested that the client take her wealthy children to lunch privately and separately and discuss the issue. One of her children requested that she be left a small portion of money or some beloved jewelry, while another child was horrified at the idea of not being named as an equal heir. What a great thing she did by having honest and open conversations with each of them privately! She decided to be extremely financially generous during her lifetime to those that need it most, and it’s working out well. When she’s gone, she’ll leave it equally to everyone and let them get on with their lives. Now she never worries about this, never thinks about it, and has great peace of mind.
Situation three: In my last case there’s not quite as easy an answer. Feelings will probably be hurt. But I reminded my clients that they must pick those most capable of serving in what will become fiduciary roles–that their own care is of utmost importance. They ended up having somewhat vague conversations with their children and exploring the idea of one or the other having this Power or that Power. It didn’t go well. So, when all was said and done, they decided not to choose any of their children and instead turned to the idea of naming a private fiduciary. They picked two that they felt comfortable with, and named one as the first choice and the other as back-up if the first cannot serve.
There’s much to take away from this conversation and these mini case studies. I think the two most important that merit your consideration are: First, be true to yourself, but think about what you leave behind. Second, reach out to your financial planning and estate planning professionals and let them collaborate with you as a team. It’s amazing the ideas that can percolate and surface in ways that leave you with a good plan and peace of mind.
Lynn Ballou is a CERTIFIED FINANCIAL PLANNER™ professional and co-owner of Ballou Plum Wealth Advisors, LLC, a Registered Investment Advisory (RIA) firm in Lafayette, California. Lynn is also a Registered Principal and Branch Manager with LPL Financial (LPL). The opinions voiced in this material are for general information only and not intended to provide specific advice or recommendation for any individual. Financial Planning offered through Ballou Plum Wealth Advisors, A Registered Investment Advisor and a separate entity. Securities offered through LPL Financial, member FINRA/SIPC.