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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

Squabbling Heirs and How They Got Their Groove Back: Part 2

Posting by Ed Kopf, Ph.D., Principal at BMC Associates

Many families find that multi-generational wealth is a two-edged sword. It presents great opportunities for enriching the lives of those who create the wealth and for their descendants. But it can also become a source of dissatisfaction and dissension. A previous post presented Part One of this short story of one (fictionalized) family. It described how the “Nashes” allowed their handling of inherited wealth to begin to erode familial trust and unity. This post, Part Two, explains how the heirs, Brad, Amy and Charles Nash, found their way back to their accustomed mutual confidence and caring as brother and sisters.

Chapter 2: The Solution. Last December, Brad asked Amy and Charles over for drinks at his house. He told them that he’d been at a conference at the National Center for Family Philanthropy earlier in the month and – as planned – had learned quite a bit about recruiting for the new CEO for the Nash Foundation. He said he intended to write up his notes for all of the directors. Brad then took a deep breath and added that, while he was at the NCFP, he’d spoken confidentially with one of the staff members about his concerns with growing tension in the Nash family over gifting and inheritance issues. She’d immediately called to his attention a NCFP publication titled Estate Planning as a Family: a Collaborative Approach. Brad said, “It really opened my eyes.”

“The idea,” he said, “was – believe it or not – that family wealth issues should be discussed openly among elder parents and their adult children. The parents can learn more about how their gifting and estate plans are affecting the children and grandchildren. The children, with a clearer understanding of their parents’ plans, can make their own financial and estate plans more intelligently. Tense discussions can be replaced by a thoughtful, comprehensive approach. And I particularly liked this, the air can be cleared of suspicions and resentments that have built up. I think this may work for us. I certainly don’t want to continue the way we have.”

Amy and Charles both agreed that something had to be done. But they were skeptical about the practicality of Brad’s suggestion. Amy said that she was afraid it would just make things worse (and wondered what Brad was up to). “We’re not that good about family meetings,” she noted, “and certainly not about discussing money.” Brad said that he had the same concern. But the NCFP essay indicated that there are professionals, combining psychological and financial expertise, who have successfully worked with other families and their advisors this way to great advantage. Charles said, “Can you send a copy of the publication, Brad? Let’s talk about this after we’ve had a chance to catch up with you.” Amy, with some hesitation, agreed.

Chapter 3: Outcome. The Nash siblings did discuss the idea further. They actually had to explore some of their mutual resentments and suspicions openly before they could take this collaborative approach seriously. To their relief, they realized that each of them wanted to find a fair and effective way to move forward. They decided to work together to approach their parents with some ideas about making gifting and inheritance plans work better for everyone. With assistance, they jointly identified their respective long-term needs. They agreed on principles for achieving equity in the way they were each to be treated. They also created a set of ideas that they believed would enable their parents to derive more satisfaction from helping their grandchildren (and children) now – while preserving their own sense of financial security. But even before they spoke with their parents, Esther and Phillip, and their advisors, Amy, Brad and Charles felt an enormous sense of relief. They were now working with, not against, one another. That was the most critical legacy of all.

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