You have documented your family’s wealth objectives in a purposeful, tax-efficient plan intended to protect assets and mold your beneficiaries into productive adults capable of managing the family’s assets.
You have ensured assets are properly titled.
You have prepared a letter to your estate administrators and family members detailing how to access your assets and how to contact your professional advisors if something happens to you.
But have you spent any time communicating to your beneficiaries WHY your estate plan is structured the way it is, WHAT family wealth and legacy means to you, and HOW you expect beneficiaries to operate after you are gone? Communicating your intentions to the next generations is a best practice for successfully sustaining and transferring family wealth. If you haven’t shared any information with your children and grandchildren yet, it may be time to schedule a family meeting for this purpose.
Communicating Your Intentions Promotes Family Harmony
It is usually better to share your planning and intentions now then to wait and have your estate plan presented for the first time following your death. Giving beneficiaries the opportunity to ask questions and hear your intentions directly from you can prevent hurt feelings, jealousy or anger after you are gone. A family meeting is an excellent opportunity to bring the family together and to provide answers to the questions your beneficiaries will have, such as:
- Why did you leave my money to me in a trust instead of just giving it to me?
- Why did you make the sister/brother/aunt/attorney the trustee?
- Why can I only receive trust assets for certain uses?
- Why do I have to serve as a trustee? Why can’t I serve as trustee?
- Why are these particular charitable beneficiaries important to you? Why is philanthropy important to you?
It may not be necessary to get into specifics about the size of an estate and exactly how much beneficiaries should expect to receive. However, discussing values in broad terms helps to moderate the expectations of your beneficiaries. Without some knowledge, competing interpretations of your intentions and the size of family wealth can create rifts between beneficiaries, which can lead to expensive litigation later as they ask the courts for validation of their interpretations. Furthermore, without understanding your intentions, heirs might view trusts for their benefit as burdens to be dealt with rather than gifts to them of beneficial enjoyment, creditor protection and tax savings.
By holding family meetings now, you can make your intentions and expectations clear. While your beneficiaries may not agree with everything in your plan, they will have the opportunity to hear from you, ask questions and better prepare for the responsibilities that lie ahead.
Planning a Family Meeting
There is no right way to conduct a family meeting, but you should consider several factors as you design a forum to share your plan. For example, you should consider your beneficiaries’ ages or life stages, how beneficiaries get along with one another and the beneficiaries’ ability to hear and discuss difficult subjects. It may be helpful to have your estate planning attorney on hand (and possibly other professionals, including accountants, investment advisors and independent family succession consultants) to present information and answer questions. A nonfamily member facilitator, such as your Warner attorney or other independent consultant, can keep the discussion on track, share exercises and trainings to foster greater understanding and connection, provide answers to technical legal questions, and ensure everyone’s voice is heard.
Agenda Items for a Family Meeting
Depending on the length of the meeting, the amount of wealth information that will be shared and the ages of the beneficiaries, the meeting agenda might include:
- Structure of the estate plan.
- Purposes of trusts, trust terms and uses of trust assets.
- Decisions regarding personal representatives, trustees, advisors, etc.
- Trustee duties.
- Assets that might make equal distribution problematic (art, collections, family heirlooms, etc.).
- Views regarding philanthropy, family legacy, family values and the use of family wealth.
- The future of existing investment and philanthropic entities.
- Health care, caregiver and end of life wishes.
- Succession plans for current employees of the family or family businesses, and plans for their retirement.
- Introduction of beneficiaries to attorneys, trustees and other professional advisors.
- Topics beneficiaries would like to learn more about to manage their future wealth (use these to create agendas for future family meetings).
Make Sure Your Family Benefits from Your Planning
An important component of your well-thought-out estate and tax plan is communication with beneficiaries. There is great benefit to discussing your planning with beneficiaries during your lifetime, as this creates opportunities to share context, intentions and answers that will better position beneficiaries for the future. Don’t hesitate to contact your Warner attorney or Laura Jeltema (616.752.2161 or ljeltema@wnj.com) to help you plan this essential meeting.
