Authors:
Jerry I. Kleiman Ph.D., R. Phillip Colon, Ph.D. [1]
Ted M. Shapses, CFP
Estate planning can be a challenge.
While the technical details of estate planning are confusing at times, they can
be readily clarified by a knowledgeable lawyer, accountant, or estate planner.
A greater challenge is dealing with the hornet's nest of emotional and family
issues and concerns that can get stirred up and paralyze parents from
implementing an estate plan. Families can be deadlocked in the estate planning
stage for years. Recognizing that any estate plan needs to accomplish more than
conserve and transfer wealth, the authors have developed a program that enables
parents to use the process as an opportunity to review, rethink and enhance
their relationship with their children.
Typically, families are encouraged to
"put aside" emotional issues as estate planners propose options and
alternatives. Emotional issues, however, are not readily dispelled and can lead
to clouding of judgment, further family dissent, and result in the avoidance of
the estate planning process. Frustration can lead to indecision or to choosing
an estate plan as a "quick fix' solution in an attempt to resolve complex
family issues, often contrary to the best interests of the inheritors.
Fearing the negative effects of
affluence and inheritance, parents are often secretive with their children
about their estate. Having never been told the true financial situation,
children, even if adult and successful in their own right, may be unprepared to
deal with their new financial reality. Their lives now disrupted by the
inheritance, they may prove their parents worse fears true.
Parental concerns about passing on
wealth to their children are well founded. Sudden affluence at any stage of a
person's life can be disrupting, creating a sense of purposelessness and
dispassion, inhibiting motivation and ambition, and fomenting distrust of
people and relationships. By having survival insured, inheritors can be robbed
of the emotional fortitude that comes from the struggle to achieve, leaving
them with low self-esteem and feelings of inadequacy. A sense of self-worth can
become confused with net worth, leading to either compulsive spending or
hoarding. Stories of inheritors squandering their inheritance or being bilked
of their fortunes abound.
Estate planning raises a host of
difficult issues for the benefactors. Parents struggle with questions of 'fair'
versus 'equal' when trying to decide how to divide their estate among their
children. When parents make decisions and exclude their children from any
discussion of their thoughts and concerns, they can inadvertently create
situations which foster sibling conflicts. They also lose the opportunity of
allowing their children to suggest practical solutions to potential problems.
Step-families and having children from more than one marriage can also
complicate the matter.
An additional concern is the issue of
sons- and daughters-in-law, as parents often hesitate to become the benefactor
to a child's spouse who is not yet experienced by them as part of the family.
Especially when considering the establishment of dynasty trusts, parents are
concerned about the effects of inherited wealth on their grandchildren, some of
whom at the time of estate planning are yet unborn.
Further impeding the establishment of
an estate plan are the parents own issues concerning money. The choice of what
type of trust to establish can be based more on attempts to control a child
than on what is in the best interest of both parent and child. Parents may
secretly begrudge the child their fortune, or may unrealistically fear not
having enough money to last them through their own lives, and avoid making
prudent decisions. Lastly, the establishment of an estate plan means coming to
terms with one's own mortality, not an easy subject to face.
The authors view estate planning as a
stage in the evolution of a family. The authors see estate planning as
providing an opportunity for parents to reappraise their understanding of their
adult children and to reformulate their relationship, deepen mutual
understanding and develop greater maturity. Using a concept termed 'family
value orientation,' and realizing that parental influence continues even as
children advance in years, the authors have developed a program that addresses
the concerns cited above.
Family value orientation can be
conceptualized as the family's character, principles, ethics, standards,
ambitions and orientation to life. The family value orientation forms the
family's guiding philosophy, its core values and beliefs, and understanding
about what is important in life. Before decisions are made as to techniques of
wealth succession, parents can identify, through a program specifically
designed for this purpose, their family's value orientation.
Benefactors can be helped to utilize
the process of estate planning to facilitate communication between the
generations and to foster positive relationships within the family. The process
of defining family values, expectations, goals and ambitions among the
generations and of preparing a family mission statement, provides a forum for
parents and children to communicate and develop an understanding of each others
wishes and needs. Parents have an opportunity to then decide how they can
assist in furthering their children's growth.
In some instances, this process can
serve to repair relationships and correct deficiencies in functioning. The
choice between establishing private foundations, family limited partnerships,
grantor, dynasty and charitable trusts is made with an understanding of the
parents' goals, the children's needs, and the family value orientation.
Parents must choose what kind of legacy
they wish to leave. The authors believe that parental expectations help program
children for success or failure. Defining, clarifying and communicating the
family value orientation allows children the opportunity to more clearly
understand, consider and utilize the positive forces which have guided the
parents and the family. It is also an opportunity for parents to understand
their children's experience of the world, and for all to appreciate
commonalties and differences.
Attending to the emotional issues in
the family paves the way for parents to feel secure that their children are not
just inheriting financial wealth, but also the wealth of their traditions and
mutually agreed upon attitudes, beliefs and standards.
This process allows parents to use
estate planning as an additional tool for putting the finishing touches on the
lifelong job of parenting.
Reprinted from "
[1] Drs. Kleiman and