Family Meetings Can Resolve Money Issues

By Sondra Forsyth

People often find it harder to talk about money than politics, death or religion. To get family money issues out in the open, Anthony D. Criscuolo, certified financial planner with Palisades Hudson Financial Group, recommends holding a family meeting.

“You don’t necessarily have to be in the ‘1 percent’ to benefit from having one or more family meetings,” says Criscuolo, who’s in the firm’s Fort Lauderdale office.

Family meetings will generally fall into one of the following types.

Big-Picture Meeting

A first family meeting often falls into this category. It covers the family’s overall financial situation and long-term plans.

“Don’t make decisions at the first meeting,” Criscuolo says. “Instead, try to achieve understanding between various family members about financial matters.”

Family members can discuss their views of the family’s wealth—both dollars and cents, and also thoughts about responsibility, fairness and philanthropy.

This type of discussion can be useful whenever there is an important change in the family situation, whether good (a wedding, a baby, or a major windfall) or bad (job loss, major financial setback, or a death in the family).

“Whenever something major changes, a general meeting can give family members permission to talk frankly about the long-term implications, financial and otherwise,” he says.

Conversations about Inheritance

A family meeting can be a “top-down” explanation of a couple’s or an individual’s plans, Criscuolo says. Subsequent meetings may be appropriate if a gift or an estate plan is substantially changed or updated. The details shared may be as broad or as specific as the individuals involved think appropriate, but may include:

• Inheritance plans for adult children
• Inheritance plans for grandchildren or great-grandchildren
• Philanthropic intentions
• Explanation of the selection of executors and trustees

Discussing a Family Enterprise

If there’s a family business, regular meetings are crucial. Family members who are intimately involved in the business’s day-to-day operations already know what’s going on, but family members with less involvement may still wish to be updated regularly.

Other discussions may cover new roles for younger adult family members and their personal long-term goals, who gets a say in major decisions about the business and who holds leadership positions within the organization, and the relationship of family members not directly involved in the business to its operations and profit. Most crucially, it should cover succession plans for when the current family leadership steps down.

Resolving Specific Problems

Sometimes, a particular issue will become pressing enough that the entire family needs to discuss it in a formal setting. Since the problem may involve intense emotions, an outside facilitator is usually a good idea.

“It’s unlikely you’ll completely resolve a major problem in a single sitting. But the best chance of a successful resolution requires calmly listening to different perspectives and keeping lines of communication open,” Criscuolo says. The goal of this sort of meeting is to resolve the issue, preserve family harmony and, in extreme cases, avoid litigation or unwanted publicity.

Dealing with Conflict

For some families, conquering the initial awkwardness of talking about money will be the biggest hurdle. Once the meeting itself arrives, everyone may be surprised at how smoothly things progress. But not always.

Money conflicts within a family will usually center on disagreements about a few key questions. Does the money “belong” to those who built the wealth or is it a family resource to be shared, and if so, shared by whom specifically? What is the wealth best used for in the long run? What is the family’s responsibility to its individual members, and vice versa?

Members of a generation that created or significantly increased family wealth may feel they have a better perspective on what to do with the family’s assets and more experience in pursuing financial goals. Depending on how much communication has already taken place, they may well have more information than younger family members about an enterprise’s operations or the nature of the family assets.

They may or may not have articulated their expectations about subjects such as the desire for their children to become self-sufficient, their philanthropic intentions, or the way they intend to fund long-term care or other lifetime expenses. “Leaving such expectations unspoken, however, can lead to hurt and resentment over time,” Criscuolo says.

On the other hand, members of younger generations may worry about how to plan their own financial affairs if they are not sure how much inheritance, if any, they should expect. But they may understandably feel awkward asking this question outright.

They may also one day be asked to step into various roles within the family, such as a leader in the family business, a trustee, a holder of a power of attorney, or an executor. They will need to know where pertinent information is located and how to contact relevant professionals, such as the financial planner or attorney involved in developing the estate plan.

The younger generation may also wonder about how the older generation will distribute assets if circumstances differ substantially between siblings or cousins. One sister may be a surgeon with a high salary and two children. The other may work for a nonprofit with a smaller salary and no children. Their parents might wish to leave them relatively equal inheritances, or they may adjust for income, grandchildren or some combination of factors.

“Whatever the older generation decides, the decision will almost certainly be easier to handle in a lifetime discussion than as a complete surprise when the will is examined after death,” he says.

Family discussions may also shed light on differing desires among younger generations. For instance, some adult children may feel a strong attachment to a family vacation home; others may not want to deal with the hassle of maintenance and would rather sell the property. Some may take a strong interest in the family business; some will not.

“Not all conflicts can be resolved through simple discussion, of course, but honesty and transparency make it much more likely that a compromise will be found,” Criscuolo says. For siblings who don’t get along, a parent can choose to set up separate trusts or bequests to remove the need for consensus and to offer a measure of privacy. The need for such steps may not be apparent, however, if everyone avoids talking about financial topics.

“Talking about money is difficult, and talking about money with family can be especially so. But the consequences of avoiding it are serious and the benefits of doing so are clear. A family meeting will provide family members a forum in which to start these conversations and, in the long run, will lead to more fully considered financial planning choices that will help maximize family wealth and harmony,” he says.

Palisades Hudson (www.palisadeshudson.com) is a fee-only financial planning firm and investment manager based in Scarsdale, N.Y., with more than $1.1 billion under management. Branch offices are in Atlanta; Austin, Texas; Fort Lauderdale, Fla., and Portland, Oregon. Read Palisades Hudson’s daily column on personal finance, economics and other topics at http://palisadeshudson.com/insights/current-commentary. Twitter: @palisadeshudson.