1. Estate Planning attorneys will tell you probate is bad, estate taxes are bad, having too much needless liability exposure is bad, and yes all of that is true. However, the one area of estate planning that families don’t pay as much attention to is family harmony. That is to say, parents leaving a legacy where children get along with each other, that they maintain family ties and loyalty.
2. Family loyalty is considered “social capital.”
3. A death in the family brings out the best in people. Sometimes it bring out the worst, or sometimes, it brings out both simultaneously, in the same people.
4. Think of your children as orphans. It does not matter for our purposes if your children are minors or not. If a parent dies, they are orphans. Orphans, famously, are exploited and abused. Sometimes, they are abused by family members, by other orphans (their siblings), by uncles, and others. But the real villain in estate planning, if you really want to know, are often the orphan’s deceased parents.
5. Think of Cinderella. She was in a loving home with a father and mother, and the mother died. Her father, as often happens, married a woman who had two daughters of her own. Her father, as also happens, died. Cinderella then has a wicked stepmother, and wicked stepsisters. The stepmother ends up with all the property that belonged to her birth father and mother. Her birth parent’s wealth is weaponized against her. Who is the real villain in Cinderella? It’s not the wicked stepmother or the wicked stepsisters. That would be like a parent feeding her children to the sharks than blaming the sharks for being the villains. What else are the sharks supposed to do? Treat orphans with kindness, compassion and respect?
6. Remember estate planning is often planning for a world where you do not exist and the circumstances of the people you leave behind, you don’t know. You don’t know who is rich or poor or has a financially abusive spouse or a substance abuse problem. You don’t know, no matter how much you think you do, what your wife or husband will be like one year, five years or ten years after you have passed away.
7. Now, if you care only about your spouse and nobody else, you should not be reading this much further, just give your spouse everything, no question. Otherwise, you should consider your entire family and consider some of the unknown in your planning.
8. Your family has systems in place. Patterns of relationships between children, parents, in-laws, partners, sometimes intertwined with business relationships that may reach outside the family. How your planning accounts for these things is going to be critical.
9. Look towards a variety of solutions. This is not a comprehensive list, and understand that in the law, there are few areas that allow for more creativity in solutions, and more opportunities for getting it wrong than estate planning. Your estate planning is not as simple as “getting a trust.”
10. A professional fiduciary is often a great choice for managing multi-generational wealth. Wealth is often a source of intra-family conflicts. Instead of focusing on conflicts, it would be better to focus on things that will unite the family.
11. For families, that have businesses, this can be a major source of problems. Getting estate planning wrong here can be destructive to both family and family wealth.
