Family conflict can complicate financial and estate planning when we work with multi-generational and blended families. This can lead to emotional decision-making. How can you remain tethered and grounded in special situations as you plan for the future?
Here are some scenarios we often see in estate affairs …
Case #1: Honoring values and stewardship with the irresponsible adult dhild
Jill and Johann, parents of adult child Sam, are carefully considering where and how they will pass on their wealth. Sam has proven irresponsible and neglectful of his children. After he and his wife divorced, Sam rarely saw them and was frequently delinquent on childcare payments.
Sam’s parents are not only disappointed in his lack of responsibility, but they also feel that if they name Sam as the chief beneficiary of their estate, he will squander it, leaving nothing for their grandchildren. Yet, they love their son very much.
He might change, they think, and so they must deliberate carefully on how to handle this. Even if he doesn’t change, isn’t the important thing here that Sam knows after his parents pass on that they loved him and believed in him?
So, how did they make their estate planning decisions? Jill and Johann decided to honor their personal values of responsibility and stewardship. As Johann put it, love doesn’t mean making an irrational gesture in giving. He and Jill have therefore decided to name their grandchildren as beneficiaries when they are adults. They appointed a trustee outside the family to steward the funds so that squabbles between Sam and his estranged wife are kept to a minimum.
Perhaps the right conversation, to begin with, is one with Sam, during which his parents address his need to step up in responsibility when it comes to caring for his children and other commitments. Jill and Johann have opted for a revocable trust in case Sam changes his ways, but they will not share this with him so that in case he does decide to behave differently, it is born out of right motives and not a desperate hope to inherit.
Case #2: Honoring wishes and intent in a blended family
Two widowed people, Jan and Jim, both in their mid-50s, have found each other. Both have adult children and grandchildren, and part of their joy is in visiting these families and playing active parts in their lives. Intent on conveying that they want to treat all children and grandchildren the same, they take great care to make sure their budgeting for all gift-giving is equal and reflects fair treatment.
Estate planning should be simple – right? Not always.
Jan’s father developed healthcare facilities long ago, and before his death, he asked Jan and her three sisters to make sure they kept the business in the bloodline. He had seen some divorce in the family and the complications this imposed.
Further, he wanted to make sure his grandchildren enjoyed the fruits of his efforts. Jan and her sisters agreed to this. Now, several years later, estate planning has surfaced this desire, and Jim is confused. Didn’t they decide at their wedding that they would treat all children the same?
Jan also worries that Jim’s daughter and husband will see this as favoritism and become resentful. She worries that this will affect decision-making later on when it comes to Jim and his healthcare, should he become incapacitated. Will Jim’s daughter retaliate due to hurt feelings?
What did they decide about the business in estate plans? They decided to honor Jan’s dad’s wishes and intent. After Jan explained her father’s expressed desires, Jim wholeheartedly agreed that the business interests should remain in Jan’s family. However, both still felt awkward around Jim’s daughter and family. How would the latter see this when the estate was reconciled?
To avoid possible future conflict and tension, Jim and Jan should have discussed estate planning long ago as part of their pre-marriage financial discussions. They had worked with a wealth adviser to budget and plan out their retirement, but they had not worked with an estate attorney to plan for their families’ futures. This would have avoided surprise on Jim’s part and an elevated comfort level on both their parts in discussing estate plans with their adult children.
Although it is not imperative, they might consider reframing in their language as to what is “his, hers, ours” so that expectations are clear and emotions around these are normalized. A generous and loving spirit does not always mean equity in property division.
How about you? If you’re waffling in indecision because of the swirl of emotions that can accompany inheritance in complex situations, consider the following guidelines:
1. Set clear expectations with family members and operate on these with integrity. Pay attention to how you share money stories, what “fair” means, and other topics that might mislead and create resentment and tension later on.
2. Ground your decision-making. Emotions can become very complex in multi-generational or blended family situations. Instead of leaning into how you feel, consider establishing personal values and sound reasoning for the way you will make your decisions when it comes to your estate.
3. Separate love from gift-giving. Decide to express your love in non-monetary ways so that when your estate plans come to fruition, your beneficiaries (and those who do not benefit!) do not misinterpret your wishes as a lack of love or caring.
With some thoughtful conversation around how you will make your decisions, you will feel more centered and confident as you plan for the future of your estate.
Patti Cotton works with executives, business owners, and their companies, to elevate and support leadership at all levels. Reach her at Patti@PattiCotton.com.
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