Wednesday, July 29, 2009

Poor Planning Results in Family Discord

I've been retained to work on an estate plan for a single man who has amassed an estate in excess of $10 million. Much of his wealth is the result of the sale of a business he had founded, while a portion is derived from an inheritance from his father who died about ten years ago.

Over the years, my client had periodically worked with his brother and father in the father's business, while the brother had worked with the father his entire adult life. Prior to his death, the father had made some equal lifetime gifts to both sons. When he died, my client's father's estate plan provided an equal distribution of the father's assets to each of his two sons (the father was a widower at the time of his death).

The father's decision to treat each son equally -- which he must have believed was the "fairest" result -- led to a permanent rift in his sons' relationship with each other. My client's brother believed that because he had spent his entire career working in the father's business, then he was "entitled" to a larger share of dad's business assets. While my client doesn't agree with his brother's analysis, he told me he would have understood had his father left more of his assets to the other son.

As I see it, the father's biggest mistake was failing to have an honest and open conversation with his sons about the father's intentions regarding his estate. Unfortunately my client said that his father -- like far too many parents -- was secretive about his intentions, notwithstanding the significant impact his decisions would have on his family's future. While such a conversation might have been uncomfortable, such a discussion would have allowed dad and his two sons to lay all their cards on the table, and express their grievances and desires. A conversation may or may not have resulted in the father altering his plan, and may not have avoided the schism between his sons, but it would surely have given them a fighting chance to head-off the ultimately sad result.

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