When Estate Docs Can’t Answer Your Questions
Addressing the questions a family business' estate planning and other legal documents leave unanswered.
i3 had the privilege of leading a discussion panel to close the first annual Estate Planning Conference at the University of South Carolina’s Joseph F. Rice School of Law.
During a packed, two-day schedule, a truly all-star cast of speakers (attorneys, professors, a tax court judge and the guy who literally wrote the book on federal taxation) covered a swath of analogous topics ranging from Tax Savings Opportunities to Defined Value Transfers. There was even a presentation dedicated to Medicare Planning for High Income Clients.
If you know anything about i3, you may be asking yourself the question, “What were you guys doing there?”
Admittedly, we were asking the same thing.
And if you’re just joining us for the first time, that question will make more sense momentarily.
What We Aren’t
At i3, we aren’t attorneys. We aren’t professors of law. We aren’t judges. And we certainly haven’t authored any literature on federal taxation.
But we have spent thousands of hours with dozens of families, sitting at conference room (or dining room) tables, listening to and helping our clients solve their most profound issues. It turns out, that unique qualification allowed us to do what the rest of the room didn’t. When we entered the Q&A portion of our panel, a great question was asked: What are the signals, impasses and needs that might come to the surface to prompt intervention from a firm like ours?
I couldn’t get to the mic fast enough. My response? “When the family asks questions the documents can’t answer.”
A chorus of acknowledgment washed over the audience. Heads nodded. Eyebrows raised. It was an answer that resonated.
In fairness, I was subconsciously led to respond that way because of recent conversations with other speakers the day before. We were exploring the gap between when the estate documents are drafted and when litigation ensues.
The question that eventually surfaced: Who exists in the middle?
The Trenches of Family Dynamics
Who dives into the trenches and works to bridge the gap between documentation and litigation? Even more, who does the work to prevent litigation from happening at all?
There it was. The reason we were invited to speak. And, ultimately, the reason i3 exists at all. Because we THRIVE in a family’s chaos, when all the documents in the world can’t save them from the weight of their questions. Questions, heavy with emotion, and often laden with the desire to leave a meaningful legacy. A legacy that not only supports the next generation, but also honors the hard work put in by the generations who came before them.
Perhaps more than anything, that’s the theme we hoped to communicate to the attendees. A theme that unashamedly recognizes and encourages families to ask the questions their paperwork leaves unanswered.
Common estate-planning questions are easy to come by. Edward Jones Trust Company offers the following:
If I have a living trust, do I still need a will?
What is a Revocable Living Trust?
How does a Charitable Remainder Trust work?
Is probate a concern only for those with large estates?
Estate Planning: Mechanical vs. Emotional Questions
Are these inquiries something i3 can help with? To an extent, yes, but they fall outside of our bailiwick. These questions are what we would describe as mechanical.
The questions we mediate are more… emotional. Let’s look at some examples:
Example #1: The Married-In
A generation two daughter – let’s call her Jane – marries a man who eventually wants to work for the family business. Jane is totally supportive. The problem? Her husband doesn’t possess the skillset necessary, and there really isn’t a job opening to begin with. The family is in the business of construction and paving, but his background is in political science.
The patriarch has hesitations, but Jane is his youngest daughter. How does Jane’s father remain fair to his employees (who might better deserve the position), while keeping harmony with his daughter?
Example #2: Fairness
A widower patriarch – let’s call him Bill – is ready to pass the family business on to his six children. In this case, the family business is more of a family office that Bill has used to accumulate real estate for over 40 years. In Bill’s town, the family name is both well-known and respected. Bill is immensely proud of what he’s built, and all the documentation is in place for him to hand it down. But he pauses.
Doubt keeps him up at night. He wrestles with the idea of fairness. He poured his blood, sweat and tears into this enterprise for most of his life. To just hand it over seems … undeserved? He loves his children, but Bill is gripped with heavy, emotional questions of great consequence. He toils over their work ethic and passion. Half of his children are highly motivated and have always wanted to be a part of what he was building. The others seem disinterested and remain uninvolved.
Example #3: Infighting
Let’s take Bill’s case one step further. He ultimately moves forward and transitions the enterprise to his children, but infighting arises between the adult children over what to do with the business. Keep the family office open? Liquidate? Grow?
Maybe those siblings who are interested in sustaining and growing the business can buy out the siblings who aren’t interested in keeping the family office open? Yet, where is the money to do that going to come from?
What if the family office grows to double its revenue and now the bought-out siblings are crying foul play?
What if…
The last 20 years of conversations have shown us that these emotional questions are all-too-common for families in business, no matter what stage they’re in.
Transition.
Disfunction.
Crisis.
Total Chaos.
We’ve seen it all, and we can help.
We repair broken lines of communication and take stock of what key pieces are missing. By engaging in difficult conversation and making sure every voice is heard, we’ll educate the family on how to restore harmony or help them find it for the first time. Our efforts will bring unity and direction to fractured areas and help rally the generations around the family mission. Most importantly, we’ll use our expertise to help a family answer its hardest questions – especially the ones their documents can’t.