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The Partnership charter

The Partnership Charter by David Gage Millions of people co-own closely held companies, family businesses, and business partnerships, but establishing them and keeping them together is never easy. Here, finally, is the guide they have been waiting for.... Read More

Collaborative Estate Planning

Parents who wish to leave foundations, trusts, businesses, properties or other assets to their children have a special challenge as they undertake their estate planning. A great deal is at stake, not the least of which is family harmony. Wills and estates are among the last gifts parents leave their children. How well they carry out this final “ritual” can affect their relationships with their children; it can affect their children’s lives and their children’s relationships with one another. It can even affect future generations.

Addressing the many complex issues surrounding the design of an estate plan can also test the parents’ relationship. Many estate plans are never completed because parents have divergent ideas about a plan and they lack a safe, conducive forum for talking through their differences.

In recognition of BMC co-founder Dr. Gage’s work with families around estates, in 2004 The National Center for Family Philanthropy asked him to write a white paper about what he calls “collaborative family estate planning.” The paper describes a way for parents with adult children to create a better estate plan by involving their adult children in the pre-estate planning process. He writes that estate planning is often a highly secretive process that transpires with little or no open discussion, even when there are adult children who are highly accomplished and working on their own families’ estate plans.

The central innovation of collaborative estate planning is the full involvement of the adult beneficiaries in conversations with their parents in the early stages of the planning process, allowing the broadest range of concerns to be addressed. The conversations, which may take place during a family retreat, enable family members to explore the personal, familial, and financial aspects of the anticipated transition. There are meetings with individual family members, meetings with various subsets of the entire family (e.g., parents, siblings, spouses), and meetings with the entire group.

Collaborative – sometimes called “holistic” – pre-estate planning gives parents more information so they can make better decisions without giving up control over how they dispose of their assets. The approach helps many couples to talk more openly and honestly about their individual wishes and get better aligned before engaging in discussions with adult children. It replaces hidden agendas with honest discussion. With this open approach, parents can help their children understand their goals. Children sometimes surprise their parents in a positive way with their thoughts and input. Families frequently acknowledge that without this stimulus to all gather together and talk, some highly significant conversations never would have occurred.

Importantly, collaborative pre-estate planning engages all members of the family. By doing so, it helps estate planning attorneys better understand the desires of parents and feel confident that everyone has spoken his or her mind. The threat of hidden agendas is mitigated and the likelihood of post-death conflicts and will contests are significantly lowered.

When an estate plan includes adult children becoming partners in businesses, properties, etc., the siblings often elect to use the Partnership Charter process to discuss, negotiate, and reach clear agreements regarding how they will work together as partners. Developing a Partnership Charter helps everyone to feel comfortable that the siblings’ partnership will be a long-term success.

Collaborative estate planning involves parents and adult children together at the beginning of the process, working with BMC Associates and the parents’ estate planner. There are numerous advantages to this inclusive pre-planning:

  • Parents still may alter their plans in response to what they learn from their children if they so choose.
  • Involving everyone diminishes the probability of adversarial proceedings that will revolve around the testators’ intent.
  • Parents gain assurance that their children will feel fairly treated and will be able to work together harmoniously if the plans require cooperation (e.g., when they will co-own a family business or vacation property).
  • Parents also gain assurances that the family will not descend into pettiness as they pass their money and possessions to the next generation and that the problems that have existed in family relationships will be resolved – or at least not exacerbated – during their final years.
  • Parents and children gain assurances that there are adequate plans for the parents if they become dependent or incapacitated.
  • Finally, many parents’ fundamental concern is that their children will embrace the values they have shared during their lifetime. Collaborative estate planning provides a final opportunity to communicate and reinforce those values.

Family meetings facilitated by BMC professionals, the heart of holistic estate planning, complement and expand upon the traditional elements of estate preparation. The parents’ attorney remains the expert on legal and financial matters and usually participates in some of the meetings to provide expert guidance, explain various approaches, and answer questions. The parents and their attorney complete the planning process with the benefit of the insights gained from the interviews, meetings, and participation of BMC family-systems specialists.

While the final legal documents the estate attorney drafts will not specifically address all of the topics covered in the meetings, the process leading up to the creation of the documents results in an estate plan that is better understood by all, more likely to be perceived as fair and acceptable, and less likely to produce hard feelings or legal challenges. The final plan is also more likely to satisfy the parents’ need to transfer both a financial and familial legacy.

Contact BMC today to learn more about how we can help.