This is an excerpt from Chapter 7 of Estate Planning Through Family Meetings (without breaking up the family) by Lynne Butler. Ms. Butler is a lawyer and frequent public speaker who has written three books about estate planning.
Why Hold a Family Meeting?
This chapter will give you some solid ideas about what kind of topics can and should be covered in a family meeting. Even if you may already be convinced that a family meeting is a good idea, you just might find out by reading this chapter that you can accomplish a lot more than you thought possible if your meeting is properly organized. This chapter will help you get the most out of a meeting.
1. Ensure That Your Parent's Wishes are Known, Understood, and Respected
A family meeting can be held to talk about anything that affects the whole family or a significant number of its members. We will concentrate on discussing family meetings that are held to talk about estate planning and related issues such as incapacity and finances.
The main reason for estate planning in general is to make a person's wishes known to his or her family members so that the person's wishes are carried out after his or her death. During a family meeting, those wishes can be expressed and documented. It is a chance for your parent to tell the family what he or she wants and to answer questions about plans to make sure that everyone understands the goals and the plans. He or she can get feedback if wanted, and can find out more information from children that might help finalize the wishes.
During a family meeting, there is an opportunity for plans that are only in the idea stage to be developed with the help of the family members. ...
2. Document the Wishes Properly and Legally
Once all of the plans have been decided and worked out in some detail, it is essential that they be properly documented. Otherwise it may be impossible for the plans to be carried out. The documents that everyone must have in place include an up-to-date will that appoints an executor and directs a distribution of assets after death. It is also absolutely essential to prepare documents that will support an individual who is still alive but who is suffering from physical deterioration or mental incapacity.
An enduring power of attorney (also called continuing power of attorney, durable power of attorney, or power of attorney for property, depending on where you live) will give a person the legal authority to deal with finances, property, taxes, assets, and debts on behalf of the aging parents. The person who will be put in charge is chosen by the parents and named in the document. This type of power of attorney is specially designed to be made ahead of time while a person is mentally healthy, and then brought into use at a later time when the person loses mental capacity.
To make decisions about health care, personal care, medical procedures, organ donation, and end-of-life issues, the aging person should have a health-care directive (also called advance directive, personal directive, power of attorney for health care, or health-care proxy). This document is not the same as a living will because it specifically names someone to be the decision maker and spokesperson for the aging person.
As with an enduring power of attorney, your parent will have the opportunity to pick someone he or she trusts as his or her representative. That person is named in the document and will be expected to step in and make decisions should your parent lose the ability to make personal and health decisions.
Whether or not your parent wants to use a lawyer to prepare documents will depend on a number of factors, including availability of lawyers and the cost. Some people can afford lawyers and have access to them but choose to take care of their own documents, as that is a personal choice. This is fine as long as your parent's affairs are as simple as he or she thinks they are. ...
3. Ease Anxieties
One of the main goals of estate planning is to provide peace of mind. This is obviously something to aim for with your parents. Your parents should be reassured that their children understand their wishes and are committed to carrying out those plans for them at the appropriate time. They should feel that they have reasonable, effective plans in place in the event that one of them loses capacity or passes away and that the family is prepared for those eventualities. There is a lot of comfort to be had just in knowing that everyone around them knows what to do in an emergency.
Your parents will also be relieved that with all the plans in place and all parties agreeing to them, there will not be fighting among the family members. The majority of people who state their goals for estate planning will say that more than anything, they want to prevent any quarrels among their children. ...
4. Find Tax-Advantageous Solutions
While it is unlawful to evade paying taxes you legally owe, it is certainly legal to avoid paying more than you have to pay. Most people will agree that they would prefer to keep more of their estates in the pockets of their families and charities than they would in the coffers of the government. Deductions, tax shelters, and tax deferrals exist and are there for you to use, as long as you know about them and how to use them. Proper estate planning can make a difference of many thousands of dollars in taxes.
It is beyond the scope of this book to go into detail about how taxes can be minimized on estates. You should realize, however, that by talking things over with an estate-planning lawyer or an accountant, you are likely to hear about solutions that can be used to keep taxes to a minimum. You will also hear about ways to make sure that the estate has enough cash to pay the taxes that cannot be avoided. If you hold a family meeting, you might find it worthwhile to ask your lawyer or accountant to attend the meeting to talk about some of the tax-planning solutions.
The following are some of the ideas that can be explored with tax savings and tax payment:
•Trusts for title to property •Trusts for spouses •Family trusts •Income-splitting trusts •Trusts for shares of a business •Assets put into joint names •Life insurance policies to create cash flow •Life insurance policies to insure debts or mortgages •Designated beneficiaries on registered financial products
5. Preserve and Pass on Family Business or Farm
The majority of business owners are so busy working in their businesses and trying to grow and maintain them that they do not get around to making a business succession plan. This is not because they do not realize it needs to be done, but simply because they are busy with work, family, and other matters, and putting together a business succession plan can seem overwhelming.
It can be extremely difficult to pass on a business successfully, efficiently, and cost-effectively without any plans in place. Although many people assume that because their business is a family business it should be easier to pass the business on to the next generation, that is not necessarily the case.
If your parents own a business, some of the things that you and your family will talk about in your meeting will be general plans for the future of the business. For example, as a group you need to know who is going to be taking over the business in the future and in what role. If there is more than one person in the family who is interested in taking it over from your parents, you need to know what your parents want to do so that someone can make alternate plans. ...
6. Maintain Family Harmony
When someone passes away or loses capacity without having done adequate planning, the two areas in which families suffer the most are finances and family harmony. Most parents will say that losing family harmony is worse than losing assets or money. Nobody wants loved ones left behind to suffer for their lack of planning.
The main way that family harmony is disturbed is by having to guess what the deceased or incapacitated person wanted to have done. Each person will offer his or her thoughts or interpretation or belief of what the person "would have wanted" and it is extremely rare that everyone in a family agrees. This is not an abstract or meaningless conversation for most people; it really matters to them to do what a loved one wanted to do. When individual family members are polarized on an issue, it can be impossible to convince anyone that they are wrong. ...
Reprinted with the permission of Self-Counsel Press.