How Advisors Keep Families From Feuding In Estate Planning Meetings
In popular culture, scheming family members often vie to inherit money from a rich relative. Tempers flare, fights break out and aggrieved plotters stew in anger.
That level of drama rarely plays itself out in reality. Instead, advisors seek to bring families together to discuss estate planning in a calm, respectful manner.
It’s not easy to take a motley group of individuals — each with their own concerns and priorities — and get them on the same page when it comes to the generational transfer of wealth. Interests and egos clash, and hurt feelings can fester.
At an industry conference in January, a TD Wealth survey of attendees — from attorneys to trust officers — found that family conflict posed the top threat to estate planning. They identified disputes over designating beneficiaries, communicating the plan with family members and working with blended families as hot-button issues.
“There’s always conflict,” said Dave Parks, a certified financial planner in Vienna, Va. He adds that the odds of discord rise when “a patriarch or matriarch rushes into it” without laying the groundwork with care.
To minimize the risk of conflict, Parks sets the stage for a successful meeting. He holds private one-on-one discussions with key players ahead of the group session, listening and learning what they want. Through what he calls a “discovery process,” he gains a better understanding of everyone’s perspective and gets a head start on addressing differences in opinion or outlook.
“Most conflict is fighting over 5% to 10% that they don’t agree on,” he said. “So we focus on what everybody agrees on and build from that. That way, families don’t walk into the room with the discussion of money being weaponized where they want to get their pound of flesh.”
Set Ground Rules
Some advisors set the tone for a family gathering by establishing ground rules. If conflict erupts, they can tamp it down by enforcing behavioral guidelines that they covered at the outset.
Parks likes to begin by saying, “Let’s all agree we will focus on areas of agreement and talk about what’s fair and just.” He finds that participants tend to relax and emphasize shared goals when they believe that they will be heard and everyone will remain polite.
If you’re worried that feelings of bitterness or spite will interfere with the proceedings, you can start with a friendly but firm warning. Jason Smolen, an estate planning attorney in Tysons, Va., sometimes kicks off family meetings by declaring, “I expect everything to be civil and cordial. If for any reason it’s not, I may end the meeting.”
“An advisor needs to have the authority from his client to call the meeting if it’s not productive,” Smolen said. “The advisor is the one person in the room” with the objectivity to lead everyone in a positive direction.
On rare occasions, Smolen says, it’s wise to prevent a “firebrand” from attending the meeting. Conferring with this hothead separately enables the rest of the family to resolve its issues in peace.
“If you find out that someone will never play well with others, that whatever you do they will not be happy and it will be somebody else’s fault, then have a one-on-one with that person,” Smolen said. “They may just use the family meeting as a platform to vent and ruin it for everybody.”
Don’t Get Stuck
Clarifying a meeting’s purpose helps everyone focus on what matters most. Otherwise, some relatives may dwell on their own narrow concerns and disregard everything else.
Smolen likes to remind family members that his clients want to advance the planning process and make their wishes known.
“These meetings are not democratic,” he said. “They’re designed to further the objectives of your client. It’s not where everybody gets a vote.”
If an argument erupts, Smolen tries to limit the damage. After a certain point, he will urge the family to move on.
“Don’t get deadlocked on one issue,” he warned. “Clients can get exhausted and not accomplish anything. It’s like taking a test: The more issues that you can get out of the way, the better.”
Sometimes, third parties can play a subtle role in sowing discord. Parks recalls dealing with two siblings in their 50s — his client’s son and daughter — who each retained their own lawyer after their father chose the son as his executor.
“The son and daughter agreed on almost everything, except she had a more aggressive attorney who wanted to do more aggressive investment and planning strategies,” Parks said. “She wanted to be co-executor.”
The siblings feuded for years before Parks helped bring them together.
“Today, they have such a loving relationship,” he said. “They are so close.”