“We think our oldest wants the house but not cash. He has no kids and probably doesn’t want our lake cabin. But we’re not sure. Our daughter wants the house and cabin plus our jewelry, largely for her daughters. She probably wants cash for her kids’ college, too. Of course, she has spent hundreds of hours helping us as we’ve gotten older. Our sons – not so much.
“We assume our youngest doesn’t care about our house as he lives several states away. But he’s cash strapped as he and his wife are teachers. They also vacation at the cabin every summer and love sailing. He might want time there and the sailboat.
“We’re not super wealthy, but our house and cabin have appreciated over the years, and we’ve lived frugally. We currently leave everything to our kids equally. But a friend died last year and did this, and his kids sued each other over who gets what.
“What should we do?”
This can be particularly challenging as family relationships often exponentially complicate negotiations given childhood rivalries, jealousies, egos, insecurity issues, and highly charged emotional environments involving the potential death of loved ones.
Here are five suggestions (two here and the rest in Part 2). Keep in mind that it’s easy and seems inherently fair to just divide everything equally. But easy is not always the best way to achieve your goals, which often includes family harmony. Strategically determining how to divvy up your assets can be life-changing for everyone involved.
1. Identify your personal goals and principles
As in all negotiations, start by looking internally and considering and prioritizing your personal goals and interests and what you want to accomplish, here with your estate and its impact on its recipients (which might include your children but also might include charities, etc.).
And be sure to identify the critical principles governing your decisions.
This might be as simple as giving your kids an equal share of everything. But if one of your kids has made millions and has no financial needs while the others work for non-profits and struggle to pay for their kids’ educations, a financial need-based principle might take precedence.
Or perhaps base some decisions on the recipients’ emotional connection to the asset. Giving the sailboat and two weeks at the cabin every summer to your sailor son and a family ring to your daughter may have nothing to do with monetary value but more to do with psychological connections.
Or maybe your daughter should get extra given her disproportionate time commitment to you as you needed more help.
I recently heard on the excellent podcast Acquired that privately-owned Epic Systems (creator of MyChart) founder Judith Faulkner put in her trust that all future Epic CEOs must come from within Epic and be trained as software developers. She also required that it never go public or be sold. These were critical principles to her.
Determine your governing principles first. Then base your decisions on them.
2. Develop a mutually acceptable process
Should you convene an in-person family meeting to hash this out? What if this degenerates? Perhaps meet with everyone individually? What about sending an e-mail or is this too impersonal? Perhaps start with an e-mail, follow up by phone, then gather the family in-person over a meal? Should the spouses be involved? Who should take the lead? Should you even involve your kids?
Here’s my advice, with the caveat that no one-size-fits-all process will work for everyone. Each family has unique dynamics and interrelationships. But some common strategic elements should guide this process (assuming you even want to involve your kids).
- Set the right personal tone at the beginning, perhaps meeting separately with each of your children in person, and share your goals and governing principles.
- Use this setting to reach consensus on how you want this process to work. Negotiate how you intend to negotiate. Getting everyone on the same page process-wise at the start will likely save a lot of heartache at the end.
- Request their input and ideas and interests but make clear that you will ultimately decide. After all, these are your assets. This is also your leverage.
- Build in sufficient time and opportunity for everyone to seriously consider all the options. Don’t impose short deadlines or put folks on the spot. Give everyone an opportunity to listen, brainstorm and share their opinions and consider what to do and how to do it. This is likely a big deal for everyone.
- Don’t jump ahead and discuss who wants what and why until after you have reached consensus on the process.
- The more individuals involved, the more important this agenda setting process.
More to come shortly in Part 2.
Latz’s Lesson: Negotiating estate issues with your adult kids can be tough on many levels. So start by setting your goals and principles and getting consensus on the process.
* Marty Latz is the founder of Latz Negotiation, a national negotiation training and consulting company that helps individuals and organizations achieve better results with best practices based on the experts’ research. He can be reached at 480.951.3222 or Marty@LatzNegotiation.com.