Family meetings ease asset-passing process

The wealthy have long held family meetings to discuss family enterprises and philanthropic endeavors.

Some meetings are multiday retreats in luxurious settings, with hired facilitators and advisers.

But even for families whose meetings are held around the kitchen table at home, the benefits can be immeasurable.

Among other things, family meetings can help the head of the family accomplish several tasks:

• Refine his (or her) estate plan, and clarify its components for the benefit of the entire family;

• Overcome the reluctance to talk about family money or difficult estate-planning issues such as wills and long-term care;

• Allay concerns or anxiety among heirs, often engendered by being kept “out of the loop;”

• Reduce the potential for family feuds over inheritances;

• Convey the family’s money history and promote money values;

• Increase the likelihood that the family business or other family wealth will endure through other generations; and

• Craft or instill a family mission statement.

While these and other issues might be discussed informally – if at all – a more formal family meeting improves the odds that critical issues will be thoroughly aired.

Finding purpose

It’s important to determine the main purpose of the family meeting.

For families of modest means, the meeting might focus on the content of the parents’ wills, and which heirs might like which heirlooms.

Talking about it now, while parents are alive, can reduce battles among heirs after the parents die.

Parents might discuss their living wills and who will have their health care powers of attorney so that the family doesn’t go through a court battle, such as that faced by the family of Terri Schiavo. They might detail their funeral arrangements and their living arrangements in the event that they need long-term care.

For families that own a business or businesses, family meetings present an ongoing opportunity to report on the state of the family venture, and to wrestle with such issues as succession planning. The same applies to families with philanthropic endeavors.

Issuing invitations

The more inclusive the family meeting, the better. Typically, you’ll want to involve not just children but also grandchildren, if they’re old enough, spouses who might heavily influence heirs, and other relatives. When a family business or philanthropic endeavor is involved, key employees, financial advisers and anyone else intimately involved in the financial life of the family might be included.

Destination

Some families really do hold meetings around the kitchen table. But it’s usually best to go somewhere neutral, particularly the more people you include. It doesn’t have to be an expensive retreat, but by making the location special, everyone is more apt to treat the meeting as such.

Structure

Advisers for family businesses recommend three components: business, education and social. In the educational segment, heirs can learn about running a family business or philanthropy or money management in general. The social element is important, as key issues can be resolved in a social setting. The frequency of meetings varies by family. For the average family, every few years will be fine, or as circumstances warrant. But for those with businesses or philanthropies, annual meetings are more appropriate.

Conducting business

Usually, the head of the family can handle the meetings. Hiring a professional, such as your financial planner, might be appropriate when the estate is complex or there are many people involved. While family meetings are not democracies, they are an excellent opportunity for the head of the family to hear feedback. Who wants to be in the family business, who doesn’t need as large an inheritance as someone else or who wants their inheritance structured in a particular way are issues for which feedback is needed. Many heads of families have refined their estate plans following family meetings.

This article was produced by the Financial Planning Association and provided by William O. Woody of Stovall Woody Associates.