6. Additional Applications of Holistic Estate Planning
Holistic estate planning is critical for families with businesses or real estate holdings that require inheritors to co-own or co-manage assets, but the planning is also useful in other family circumstances. For example, just as an aging mother and a lone daughter can benefit immensely from some relatively simple asset transfer strategies, they can benefit also from just one meeting with a family dynamics expert who can help them review the significance of the family transition, share personal information they have not discussed, and clear up possible misunderstandings.
One simple family situation involved an eighty-seven year-old mother and her daughter, a sixty-two year-old divorced high school teacher with two teenagers, who struggled to make ends meet and had very little in retirement savings. The daughter vacillated between the fear that her mother had no money left and the fear that her mother had a considerable fortune but was not planning to leave a cent to her or her children. The daughter was a competent woman, but like so many adult children, she believed her mother would consider her greedy for asking about her money and what she intended to do with it. The daughter did inherit all of her mother’s half-million dollar estate, but only after suffering through significant and needless emotional turmoil during the years she was kept in the dark before her mother’s death. The story illustrates the advantage of having a simple informational meeting between a parent and child.
Holistic estate planning is imperative in family situations in which the potential for conflict is high. In addition to the overall value of the estate, other financial issues that can complicate estate planning include: economic disparity among heirs, inherited or other separate property, and oral promises that certain assets will go to certain people. Family circumstances such as children with mental, emotional, or physical challenges; poor parent-child or sibling relationships; educational and income disparities among heirs; divorces and multiple marriages; different ideas and desires about philanthropic endeavors; indecisive or dogmatic testators; and circumstances in which some children disproportionately care for parents also can complicate estate planning.
None of these issues is straightforward because it is impossible to know what people think about a situation without thorough interviews. For example, a son who provided years of care for a sick mother may expect a larger share of the estate. Alternatively, he may believe he had benefitted already in some intrinsic way and would not expect, wish, or feel entitled to any inheritance above that which his siblings receive. The mother may wish to recognize and reward the son’s assistance, or she may view the years of help as a way of balancing the years of special attention she gave that son earlier in his life. A sister may believe her brother is entitled to special recognition, or she may believe her brother did no more than she would have done if the circumstances had been reversed.
Giving parents examples of how easily family circumstances and dynamics can complicate the planning and execution of an estate can help parents appreciate the need to address the nontechnical, human side of the family transition before they try to tackle a specific plan. A widowed mother in her late seventies with one daughter and one son decided to leave her one million-dollar estate to her daughter because of the wide disparity in the siblings’ net worths. She did not tell either one of them for fear that the son would be angry, and as it turned out, she was right. The son was speechless when he found out after the funeral. He claimed his anger resulted from the fact that his mother and sister were plotting behind his back, and he assumed his sister had talked his mother into the plan. He said the money was insignificant to him and that he would have been happy for his sister to have their mother’s money if only he had been consulted.
Now, over a decade later, he speaks to his sister only when necessary, and their children rarely see one another. The son’s memories of his mother are tainted by the memory of being cut out of her life at the very end. The ultimate insult, the son said, was feeling trusted and respected by his mother for years, and then being furtively cut out.
A potential conflict between the mother and son became an actual conflict between the brother and sister—one that, so far, has been irreconcilable. Even if the brother would not have liked his mother’s idea of leaving her money to his sister, the family’s experience most likely would have been healthier if a family dynamics expert had encouraged and assisted the mother in discussing her intentions with her children when drafting the will.
Another circumstance that begs for family dialogue is elevating one or more of their children over others through their estate plan, for example, making one child a trustee, or appointing one to be the executor of the will and giving that child information that the others do not have. These choices, while perfectly logical and straightforward to the parents, may inadvertently alter or destroy what were reasonably healthy relationships. Choosing one sibling to manage indefinitely another’s inheritance, or designating co-trustee siblings to make financial decisions for other siblings who may not trust them can create problems. These situations are ripe for misunderstanding and resentment, and they may potentially alter family dynamics in unpredictable and detrimental ways.
