“ You don’t choose your family. They are God’s gift to you, as you are to them.” Desmond Tutu
None of us expects life to be perfect and I guess in the game of life some get luckier than others. However, preserving happy healthy relationships with the people we care most about is one of our most important indicators of long term happiness, so it’s worth maximising your chances of success in this area.
In legacy planning, I see the potential to create the best of family relationships and yet there is also the potential for resentment and communication breakdown. If you have read my book, Wealth with Purpose, you would be familiar with the concepts of purpose, strategic planning and investing. By and large these areas impact you the most – get them right and you live comfortably, get them wrong and you are the one that suffers.
Legacy planning however is different as it introduces the opinions and emotions of others into the equation, and deals with the big risks if something goes wrong, or potential resentment if the transfer of wealth from one generation to the next is not seen as fair. A young family without adequate insurance is courting dire financial consequences, and an estate plan that is seen to favour one sibling, or the grant of a power of attorney to one son and not another can cause rifts between family members that are by and large avoidable and unnecessary.
Like most human interactions, the solution to creating family harmony lies in a commitment to open communication. This is why, at my firm Capital Partners, we have long advocated the need for parents, particularly family stewards, to get their adult children together to explain exactly how the legacy plan is structured and why. We call this the family meeting.
At the family meeting Mum and Dad, along with their adviser explain the family wealth structures and explain how the will is expected to be distributed. This is particularly important if siblings are to take joint control of a family trust structure and will be required to work together in the long term to manage the assets. If an independent executor and trustee is to be appointed to manage the estate, this is the time to explain why so that when the will is being administered everyone is clear on the parent’s wishes.
The family meeting begins with the parents outlining their values and their hopes for the legacy to be passed from one generation to the next, then there’s an explanation of the family’s trust and company structures, and finally an explanation of the wills. The opportunity for adult children to ask questions, clarify and understand the issues is a positive first step towards a successful outcome.
The idea of a ‘no surprises’ policy is often the best way to promote long term harmony in any family and while there are no guarantees, clarity and understanding can often go a long way towards avoiding conflict.
Starting these conversations can be difficult, and a trusted financial adviser can really help. Capital Partners Private Wealth Advisers is the FPA Professional Practice of the Year, and is committed to helping people live richer, happier lives.