Your Finances:
Family Meetings

Cheryl R. Holland

“Once recommended only to the ultrawealthy, family meetings are becoming common for families who want to
make decisions about their estate plan and in the process, share their values, hopes, and dreams.”
 

Cheryl R. Holland is the founder and president of Abacus Planning Group, Inc., a fee-only, financial planning services firm in Columbia, South Carolina (www.abacusplanninggroup.com).

Charles and Elizabeth were a financially successful couple. They felt secure about their own financial future and had educated both of their children without saddling them with student loans. They were fortunate to have living parents, but they did not know whether their parents might eventually need financial help. They were also uncomfortable with some of the spending habits of their son and worried about the financial security of their daughter, who was a classical ballet dancer married to an elementary school teacher.

When it came time to update their estate plan, it was difficult to decide how best to leave their money to their heirs. Did they need to meet potential financial needs of their parents? Were they positioning either of their children to squander money? The couple also wanted to leave a substantial charitable gift through their estate plan. Would the children see the gift as an absence of love?

At the recommendation of their financial advisor, the couple decided to host a family meeting to discuss these issues. They met with each set of parents and then with each child culminating in a multi-generational family meeting.

The meetings were a success from everyone’s perspective. The initial trepidation Charles and Elizabeth felt about broaching a potentially taboo subject was replaced by a sense of accomplishment and relief. The family now meets once a year. Everyone hopes the meetings will be an opportunity to learn more about each other’s values and experiences.

Once recommended only to the ultrawealthy, family meetings are becoming common for families who want to make wise decisions about their estate plan and in the process, share their values, hopes, and dreams. Many families find the holidays or a family reunion an opportune time to schedule two or three hours to discuss financial issues. Depending on your family’s communication style, you might simply pick up the phone, invite everyone, and provide a brief verbal agenda. Other families prefer to send a letter of invitation explaining the purpose and importance of the meeting while inviting additional agenda items.

Families uncomfortable with discussing financial specifics can start with a discussion of future health care choices. Just sharing your goals of how you plan to pay for your long-term care, where you want to live, who will be responsible for health care and end-of-life decisions can be welcome information to your adult children. Some families even discuss hospice, funeral, and burial arrangements.

A next step in sharing is often explaining the details of your estate plan without the actual dollar amounts. For example, you might explain that you are leaving each child an equal share of your estate. For a family with a special needs child, the parents may share that a larger portion of the estate will be held in trust for this child’s care. Even discussing simple issues such as who will be the personal representative responsible for probating the terms of your will or who will be the agent of the health care power of attorney goes a long way in smoothing the inevitable difficult path of watching parents aging and dying.

You can host the meeting at your home, your financial advisor’s offices, or a private room in a restaurant. Many families find that rotating the venue brings a fresh perspective and differing conversations. Families that feel comfortable sharing the financial details of their lives often make changes to their estate plan. One adult child may have significantly more wealth than another and would prefer to have their inheritance left in trust for their children, thus saving significant estate taxes at their death. Without these conversations, the parents may have left assets to each child in the same manner.

Beyond the technical and financial details, many families enjoy the opportunity to share their financial philosophies. Understanding how difficult it was to earn enough to buy even the necessities during the Depression boosts your understanding of why your elderly grandparents despair when you pay someone to cut your lawn each week. Conversely, your parents’ knowledge that you earn more at the mid-point of your career than they can imagine, helps them understand that time is more precious than money.

Respecting differing financial values can sometimes be difficult. Many wealthy families who have a common financial interest such as a family-owned business or numerous real estate holdings retain a professional family business consultant to facilitate these meetings. These individuals can work with a family to make sure everyone is heard. The surfacing of the inevitable family issues, which often wreak havoc on long-term financial success and family relationships, is a valuable process, and with proper guidance can result in stronger family ties.

If you are considering a family meeting to address broader principles, you might want to start with some of these questions. What is my first memory of money? What does financial independence mean? If I won a lottery tomorrow, how would I change my life? What are we teaching our children about money? If you have a family with young children, you might start with simpler concepts such as the rationale for their allowance, expectations about who will pay for college costs, and discussions of how Mom and Dad make financial decisions together.

Family meetings can be as simple as sharing basic information about your estate plan or as philosophical as a discussion of the meaning of money. Each family has its own unique needs, dynamics, and financial dilemmas. But shared knowledge and understanding is a powerful bond that can last for generations and may be a greater gift than the money itself. o