Family Meetings Can Help Pass on Family Assets

Passing on the family wealth from one generation to the next-whether involving a network of businesses and philanthropic organizations or simply the family home and prized heirlooms-is never easy. But periodically holding family meetings can go a long way in making that transition smoother, more effective, and less painful for the head of the family and their heirs.

The wealthy have long held family meetings to discuss the family enterprises and philanthropic endeavors. Some meetings are multi-day retreats in luxurious settings involving hired facilitators and advisors. But even for families whose "meeting" is held around the kitchen table at home, the benefits can be immeasurable.

Family meetings can help the head of the family, among other things,

While these and similar issues may be discussed informally, if discussed at all, a more formal family meeting improves the odds that critical issues will be thoroughly aired.

Determine the main purpose for the meeting. For families of modest means, the meeting might focus on the content of the parents' will and which heirs might like which heirlooms. Talking about this now, while the parents are alive, can reduce battles among the heirs after the parents die. The parents might discuss their living wills and who will be their health care power of attorney so the family doesn't go through a Terri Schiavo-like court battle. They might detail their funeral arrangements and living arrangements should they need long-term care.

For families with a business, family meetings present an ongoing opportunity to report on the state of the family business, as well as to wrestle with such issues as succession planning. The same applies to families with philanthropic endeavors.

Determine who to invite. The more "inclusive" the family meeting, the better. Typically, you'll want to involve not just children but grandchildren (if they're old enough), spouses (who may heavily influence your heirs), other relatives, sometimes key employees and financial advisors for meetings involving a family business or philanthropy, or others who may be intimately involved in your financial life.

Choose a comfortable place to meet. Yes, some families can hold the family meeting around the kitchen table. But it's usually best if you can go somewhere neutral, particularly the more people you include. It doesn't have to be an expensive "retreat," but by making the location special, everyone is more apt to treat the meeting as special.

Structure it. Advisors for family businesses commonly recommend three components: (1) the business portion, (2) an education component where you can educate heirs about the running of the family business or philanthropy, or managing money in general, and (3) a social component. Don't overlook the latter. Important issues can be resolved through the social setting.

How to conduct it. Usually the head of the family can handle such meetings themselves. But hiring a professional such as your financial planner to facilitate may be appropriate where the estate is complex or involves many people.

Listen. While family meetings are not democracies, they are an excellent opportunity for the head of the family to hear feedback. Who really wants to be in the family business, who doesn't need as large an inheritance as someone else, or who wants their inheritance structured in a particular way? Many heads of family have refined their estate plan following family meetings.

How often do you hold a family meeting? For the average family, every few years will be fine, or as circumstances warrant. For those with businesses or philanthropies, annual meetings are more appropriate.

May 2005 - This column is produced by the Financial Planning Association, a membership organization for the financial planning community, and is provided by Terry Green, CFP, AIF, a local member of the FPA.