All too often families fight about money. Commonly these feuds are started over real estate, family businesses or care decisions for aging parents. No parent’s dream for the future of their family includes disownment or troubles amongst the siblings, yet they are most often the ones to blame for the discord.
The parents are to blame because preventing future feuds depends on clear communications and creating a plan for financial assets. In the course of planning for families with valuable assets, I’ve personally witnessed many parents avoid significant decisions and communications. They all deemed that the situation will work itself out – and they do, but not without heartache and estrangement.
Real estate, whether it be rental property or that memorable vacation home invites frequent problems. The two main issues are typically maintenance and usage. On the maintenance front, there may be one or more children who is capable and interested in maintaining the home. But what do you do with the children who have no ability to do the maintenance or simply can’t afford to chip in for their share of the maintenance costs?
These situations rarely end peacefully. Parents should place the property into an entity such as a trust, and endow it with cash for future maintenance. The directives in this trust should be based on the parents’ vision for how they’d like to situation to continue after their own passing.
Family businesses frequently cause family feuds, but with a twist. The twist is nepotism versus ability. Most business consultants would agree that business owners have a fiduciary responsibility to their customers, employees and family to adequately plan for business succession. If all children are active in the company, it may make sense for all to inherit or buy that business. But that doesn’t mean they are all equals in terms of abilities, titles and responsibilities in the operations; and that issue needs to be addressed well in advance of any succession strategy. With proper planning, the business can thrive post-founder, and the family can live in harmony with an equitable solution. It may not include dividing the business equally.
Caring for aging parents is another cause. Whether it is over unequal time spent in delivering care, or the division of assets postmortem, this too can be avoided. Needless to say, long term care insurance is one solution, but not everyone can afford or qualify for coverage. The other is simple and direct communications. Too many parents have a secret plan where they expect care from their children.
This needs to be discussed to set the expectations among parents and their children regarding care and the ultimate division of any remaining assets.
John P. Napolitano CFP, CPA is CEO of U. S. Wealth Management in Braintree, Mass. Visit JohnPNapolitano on LinkedIn or uswealthnapolitano.com. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. John Napolitano is a registered principal with and securities offered through LPL Financial, Member FINRA/SIPC. Investment advice offered through US Financial Advisors, a Registered Investment Advisor. US Financial Advisors and US Wealth Management are separate entities from LPL Financial. He can be reached at 781-849-9200.