People who plan their estates generally want their offspring to enjoy each other well after the parents have passed, but nothing breaks up a family faster than leaving a legacy of hate. Deciding whether to leave grandchildren or charities a monetary bequest, and what percentage to leave each child, is relatively simple. More difficult issues arise concerning a family business, land that has been passed down through generations, or a vacation home.
Planning for the ownership transfer of a successful business upon retirement or death is imperative. The question becomes whether to pass the business to someone inside or outside of the family, as second- and third-generation businesses are often wrought with problems. Children may lack business skills or may simply be better suited for daily operations than they are for management. For some families, there is a child who has taken an interest in the business and perhaps contributed more to its success, therefore deserving to inherit more. A business attorney can assist with succession planning and draft an agreement that provides the most beneficial exit strategy.
Land is a unique asset. Some children may have a sentimental attachment to the farm your family has owned for decades, while others may want it sold for the highest possible price. There are many options in dealing with parcels of land. You can subdivide prior to your death and leave each child a separate parcel, direct that the property be sold, or offer one child a first right of refusal to purchase the property from the others. Careful consideration should be given to these options, as lawsuits over land partitions can be very costly.
Do you remember the great family times shared at the river, lake or beach house? Serenity can be replaced by adversity when families are faced with decisions about maintenance, usage, rental agreements, special assessments, taxes and utility bills on a vacation property.
One way to avoid family disharmony is to direct in your trust that assets be sold and the proceeds equally divided. For some, though, it makes sense to develop a shared ownership plan. For these and other estate planning options, I invite you to contact me or one of my colleagues at the firm who counsel in tax, business and real estate law. I appreciate the opportunity to write the last article in this series, and I look forward to contributing to this column next year.