Lisa Gray has been a wealth writer since 2001. She has been involved in the wealth management industry since 1988. She is the author of two bestselling books—The New Family Office and Generational Wealth Management.| Estate And Succession Planning Must Be Robust To Avoid A Possible Wealth Management Nightmare |
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| Tuesday, May 08, 2012 12:09 |
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Your client who died ten years ago has three children, one of whom he left in control of the family business. This eldest son was named the executor of your client’s will. He’s also trustee over the three trusts. You are the manager of the trust assets. The two younger siblings have hired a lawyer and are getting ready to sue.
Maybe you haven’t dealt with the emotional side of things before. But here’s a clear case where you could lose one of your largest accounts and what you thought was one of your best client relationships.
This Website Is For Financial Professionals OnlyThe two younger siblings are 35 and 38 years old and have wondered why they are not getting distributions from their trusts.
Come to find out, older brother moved their trust money into his trust so he could “manage” it better.
Of course, you never knew any of this…until now.
We read in the media about these kinds of stories all the time, usually about the significantly wealthy who are majority shareholders in large public companies.
It’s not limited to the US, or to Asia, or to anywhere else. It happens all over the world and it can happen to a family that owns a small, $20 million fortune.
This client was a Silent generation man who didn’t talk about the money and who didn’t believe in telling the rest of the family how much there was.
In this case as in others, the father trusted his older son to take care of his younger brother and sister.
He gave strict verbal instructions that the other siblings were not to be given their part of the money all at once and that they should be at least 30 years old before they got anything.
The only place any of this was written down was in the father’s will, naming the older son executor of the estate and successor trustee.
The trust document had very few specific parameters because the father had confidence his son would manage the trust according to his wishes.
How can you help them?
At this late date, the best you can do is to encourage your client to hire an external consultant or psychologist specializing in family dynamics issues and agree to work with that professional as well as the family attorneys.
That may not solve the issue but it will offer support to the entire family as it goes through this horrible litigation. It could even lead the family to a more amicable settlement.
For other clients whose issues have not reached this type of breaking point, you can help them do better planning.
Step One is to meet with your client and to go through an in-depth discovery process involving his wishes for both the business and his heirs.
Step Two is to have a family-wide conversation about those wishes—what is to happen and who is to control what. Elicit input from other family members.
This can be a delicate process, one that also may require additional help.
Step Three is to hire an estate planning and/or business succession planning attorney to formally document what has been decided. Everything that has been decided.
The smallest detail that is overlooked can one day end up being the focus of a family lawsuit.
Minimum attorney’s fees for family lawsuits can range from $100,000 to $2 million to $40 million.
Whatever the cost, the toll is always emotionally devastating and tragically wealth depleting. This is a conversation your clients will thank you for starting with them.
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