Estate Planning & Execution: Preserving the Family
The execution of your client’s estate planning and distributing family assets after their death is most definitely a complex and distressing procedure, but there are ways in which affluent families can make this distressing process as painless as possible.
Entrusting tangible personal property like art, furniture, books, and other collectibles can be accomplished through a last will and testament. Tangible assets are usually left to the surviving spouse or whoever is next of kin.
Unfortuantely, when the time comes for such sentimental items may be contested when dispersed among heirs. Many clients with children will admit to worrying about sibling rivalries that may flare up during this process. The unfortunate part is that these situations occur on the tail of a parent’s death or incapacitation. Since this is a stressful time under peaceful circumstances, these periods are not usually conducive to discussions necessitating delicacy such as ‘who gets what.’
Discussions about the distribution of non-titled assets can help to make your client’s wishes well understood by all parties. It also gives people a platform for storytelling. Nostalgia is a powerful psychological device and hearing how an object was found during a special trip or passed down through the generations can invoke emotional value.
Broaching ‘the discussion’
Parents naturally put off discussions about who gets what—no one alive wants to face their own mortality. As such, sometimes it becomes the children’s responsibility to initiate the conversation. Possible ways to approach it include starting a ‘what if’ conversation. For example: “If something happens to you, are there particular things you have in mind for each of us?” Conversations like this can instigate a meaningful dialogue.
But considering the emotional aspect of these situations, some people are uncomfortable talking about specific objects and possessions. In this case, a more subtle approach should be attempted.
One way is to ask your clients to explain how they see the distribution of their belongings carried out. Once the subject is presented, often they will explain how they foresee this being carried out.
The discussion about parents’ wishes should they become incapacitated is also important—especially if a child, advisor, or pursuant to a durable power of attorney or guardianship should become the decision maker. What belongings should be sold to raise funds for care (if any)? Ensuring that all parties are on the same page helps ensure that decisions regarding the care of your client are determined in expedient fashion.
Approaches for asset owners
- Sell a collection
If your client has compiled a collection, they are most likely the best person to be able to dispose of it. For example, an avid collector of valuable art has negotiated a sale of his collection to a public museum. This act brings him immense pride, provides liquidity of assets during life, and eases the burden on his children down the road—they don’t have to execute the sale of an obscure but lucrative collection.
- Identify wishes in writing.
A letter of instruction may not be legally binding under every state’s applicable law, but a signed document makes the intended recipient clear. Clients who don’t sell collections during life can permit their children to do so, putting in writing that it’s appropriate to view a valuable antique as college tuition.
- Preselect Items.
Some families have had success placing color-coded stickers underneath objects to later identify who receives what.
Approaches for heirs
- List Preferred Items.
Heirs can compile a list of items that are favored, and then an appointed outside party reconciles requests. Many families see this process occur with relative ease, but it is also not uncommon to incorporate degrees of brokering, negotiations, or bartering by outside parties.
- Draw Straws to Determine Selection Order.
Once the order of selection has been established and the first round has been completed, the second person in line begins round two, the third round three, and on and on until all assets are accounted for. The selections may be grouped in terms of relative value—items of sentimental value kept separate from more expensive pieces.
- Hold a Family Auction.
Utilizing play money, heirs are free to trade items once the process is complete.
No matter the method used to divide up your client’s assets, the important thing to remember in estate planning execution is to preserve family relationships, honor the parent (client’s) legacy, capture memories and divide tangible property up among heirs as amicably as possible.