Avoid intrafamily disputes with a
family mission statement
When you plan your estate, you may have several goals in mind, such as providing for your family's financial future, establishing a family tradition of charitable giving or transitioning a family business to the next generation. One outcome that most certainly isn't part of that vision is having family members sue each other over your money.
In most cases, you can avert intrafamily disputes by clearly communicating your plans to your loved ones and giving them some input into the final decisions. An effective and increasingly popular tool for accomplishing this is the family mission statement.
The idea behind a family mission statement is for the family to agree on a basic set of guiding values and principles - on anything and everything, from philanthropy to education to religion to the future of the family business - and to memorialize them in a written document.
The idea behind a family missionl statement is for the family to agree on a basic set of guiding values and principles and to memorialize them in a written document.
There are no special rules that govern the format or length of a mission statement - it can be a single sentence or a 20-page monograph. The important point is to make sure that everyone is on the same page and that there are no surprises when it comes time to implement your plan.
A family mission statement is particularly valuable if you own a family business, plan to give a sizable portion of your estate to charity, have children from a previous marriage, or have established one or more "incentive trusts" designed to shape the behavior of your heirs.
When a family business is involved, for example, you may struggle to balance your desire to treat all of your children equally with your interest in preserving the business and rewarding those children who are committed to working in it. If most of your wealth is tied up in the business, it may be difficult to provide for children who don't work in the company without giving them an equity interest. But this may be objectionable to the children whose hard work contributed to the business' success.
One potential solution is to divide the equity equally among your children but to provide those working in the business with management control by issuing voting stock to them and nonvoting stock to the others. Whatever strategy you come up with, the key to success is to discuss it in advance with those who have a stake in the outcome.
If one of your goals is to leave a philanthropic legacy, it's even more important for your family to participate in the discussion. Warren Buffett is famously leaving the bulk of his multibillion dollar estate to charity, and his children are fine with that. But imagine if they didn't learn of his intentions until the reading of his will.
By discussing these potentially divisive issues in advance and outlining your plan in a family mission statement, you can avoid unpleasant surprises and disputes.
Making a statement
No matter how hard you work to ensure that your estate plan treats all of your family members fairly, hurt feelings and disputes can result if your heirs don't understand your motives. A family mission statement isn't the only way to communicate the values and principles underlying your plan, but the process of putting the statement together can be an effective way to articulate those values and principles and to give family members an opportunity to be heard.
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and trust planning, income tax planning, philanthropy and asset management.