Tag: Family Meetings

Why You Should Have a Family Meeting

Many folks have not considered holding a family meeting in a slightly more formal setting like one of your advisor’s offices.  There can be many advantages to these. 

Confidence is an important outcome that we talk about here.  Do your spouse and children know what to do if you are not there?  Whether they articulate it in advance or not, most families express a substantial improvement in their sense of security knowing there are caring professionals with knowledge of their situation who are there and ready to help at any point.

This is also a great time to develop and perpetuate family values, principles and mission. A place where we are focused on being good stewards of business and personal wealth and taking care of family can facilitate discussions in this regard. Our team will provide examples if this is your first attempt at reducing your values and principles to writing.

While there are many more benefits to these gatherings, a word should also be said about confidentiality.  A meeting with your advisors does not mean disclosing too many details too early.  It is much less important to share amounts, or even specific assets, than to introduce your team and let your family know that you have thought about, and have a plan for, their long-term wellbeing.

If you have any questions about hosting a family meeting, or if you would like to set up one, please contact us.

*Intended as general guidance only and not as legal advice.

3 Takeaways: 40th Annual Estate Planning Conference

The 40th Annual Estate Planning Conference, held as usual in Kiawah Island, South Carolina, just concluded. Below are three takeaways we believe you’ll find useful in your practice.

FLP Entities

John W. Porter, an experienced tax litigator with Baker Botts LLP in Houston, Texas spoke on several topics including family limited partnership style entities. There were a number of takeaways but a good summary is still “respect the entity.” Too many families treat these as personal bank accounts rather than business entities and do not get the results they hoped for. If your clients have these LLCs or LPs and still desire the benefits that led to their creation, encourage them to have at least an annual meeting with their advisors to help ensure that they are operating the entity as a business.

Kaestner

We’ve written before about the US Supreme Court decision that ruled North Carolina’s attempt to tax trust income merely on the basis of a beneficiary residing in North Carolina unconstitutional. N.C. Dept. of Revenue v. Kimberly Rice Kaestner Family 1992 Family Trust, U.S. Sup. Ct. No. 18-457 (June 21, 2019). The important planning opportunities going forward will involve advisors looking at the three factors that states basically use to determine whether they will tax a trust’s income and then assisting their clients in making strategic decisions accordingly. The three considerations that normally are involved in state income taxation of trusts are the location/residence of: (1) Grantor; (2) Trustee/Trust Administration; and (3) Beneficiary(ies).

Grantor Trusts

A third takeaway also comes from Porter and I’ve heard this called the “greatest estate planning technique” at various CEs for about the last 10 years. The technique is grantor trusts and it is indeed very powerful. If you want to make a gift outside the tax system, you normally need to keep it under the annual exclusion limit. With a grantor trust, however, you are allowed to pay all the income taxes for the trust and not report it as a gift. Trust assets (and other assets for that matter) grow quickly without the drag of income taxes. Mixing this technique with the magic of compound interest, many of us have seen this become so impactful that even very affluent clients eventually decide to turn it off and stop transferring wealth to younger generations with it. Furthermore, as Porter reports, the IRS really can’t attack it.

*Intended as general guidance only and not as legal advice.

Three Reasons To Talk To Your Kids About Your Estate Plan

Have you been avoiding the “uncomfortable” topic of your estate plan with your children? You want to do what is best for your children but perhaps you are legitimately concerned that your children are too young or busy, the conversation will be perceived as morbid or will not deliver the message you intend, or you just think it is too personal or confusing to discuss. For these and many other reasons, it is certainly an easy discussion to put off. However, with the holidays and plenty of family time approaching, we want to review three important reasons to take the plunge and have this critical conversation.

1. It’s Practical.

Put simply, if you want things done according to plan, you need to communicate the plan. Most children we speak with do actually want to know about their parents’ arrangements and wishes so they can help carry them out. Even if you choose not to share the financial details, at a minimum, we recommend discussing two basic things with your children. First, tell them the location of and how to get access to your important documents. Second, tell them the people on your “team” (e.g. financial advisor, accountant, attorney) that they should contact immediately after your death. This may seem obvious but preparing them for the actions they will need to take at your death will alleviate unnecessary stress for them during the emotional time immediately after.

2. Providing the “Why”.

Although your estate plan documents detail what goes where, they usually do not explain why. For example, unequal distributions or receipt of large sums or complex assets may be confusing to your children without the proper context or instructions. Communicating with your kids now, either one-on-one or in a family meeting can help to avoid confusion or hurt feelings after your death. It is also a great opportunity to share your values with the next generation so that they can continue your legacy. If you cannot find the courage for a conversation, at least consider writing your wishes and objectives in a non-binding letter format to keep with your other important papers.

3. A Teachable Moment.

As a parent, you have been given the privilege of leading your children by example. If you discuss the importance of estate planning with them now, you can teach them not only what you have learned about the process but also emphasize why it is critical for them to undertake as well. In addition, recognize that your estate plan may impact the planning that your children implement for their own families.

Don’t keep your kids in the dark or let the opportunity to communicate the plan, your “why”, and the importance of the process slip by. It can be as simple as starting with “I know you might think of this as an uncomfortable topic, but it is important to discuss it so you are prepared.” In addition, our attorneys have experience planning and conducting family meetings and would be happy to help you start the conversation by arranging one or more meetings at your request.

 

* Intended as general guidance only and not as legal advice.