Estate Planning and Family Scenarios

"I'm worried about my parents. I don't know if they have their affairs in order and they refuse to talk about their estate plan."

This is a typical comment of adult children whose parents are in their senior years. Children care about their parents but don't feel comfortable talking to them about what will happen after their parents are gone. Unfortunately, this silence can have negative effects for children once their parents are deceased. Most seniors never had their parents talk with them about their Estate Plan and don't think it is their children's business. Now though, with more legal complexities it is important for children to have some idea what would be involved if their parents aren't able to handle their own affairs or pass away.

On the other hand, parents may not know what’s appropriate to discuss or withhold from their adult children regarding their estate.  Barnabas Foundation offers you helpful insights about having a discussion with family members that will benefit both children and parents.

What Happens to the Family Business or Farm?

Your family may face some difficult decisions when it comes time to discuss what to do with your estate. We discuss and explain several types of financial vehicles to guide your thinking.

If you own a family business, at some point you will have to decide what will happen to it after your death. Family businesses create special Estate Planning problems. Being fair to all children, whether they are actively involved in the business or not, can be difficult because each one’s attitudes toward the business may be very different.

Children wanting to work in and eventually take over the business expect to spend a lot of time and effort with limited return initially. This may lead to the attitude that because of their hard work, they deserve more from their parents estate.

On the other hand, children choosing not to be involved in the business may believe that, since they did not have a thriving business "handed to them" and had to make their own way, they deserve more from their parents estate. Frequently, each view is reinforced by a child's spouse who may not fully understand the family's history and goals.

Parents naturally want to be impartial toward their children. Therefore, to avoid the appearance of taking sides or confronting these conflicting attitudes, many family business owners choose to simply ignore the issue in their Estate Planning. Rather, they have a very simple Will or no Will at all, both of which mean that the estate gets divided among the children "in equal shares." Although this approach sounds reasonable, it fails to recognize something we all know but rarely acknowledge: it is almost impossible to divide anything equally unless an estate is made up entirely of cash or of identical items.

If you own a family farm, you will also face specific Estate Planning problems relating to farm ownership and operations. Naturally the parents want to be fair to all children, whether they farm or not. Difficulties arise because the children’s attitudes toward the farm may be quite different. Those wanting to stay with the farm expect to invest a lot of time and effort initially without having much to show for it. They believe that, because of their hard work, they deserve more from their parents estate. Children choosing not to farm may believe that, since they did not have a profitable farming operation "handed to them" and must make their own way, they deserve more from their parents estate. Frequently, each view is reinforced by a child's spouse who may not fully understand the family's history or goals.

Parents usually want to be impartial toward their children. Therefore, to avoid the appearance of taking sides or confronting these conflicting attitudes, many farmers choose to simply ignore the issue in their estate planning. Rather, they have a very simple Will or no Will at all, either of which means that the estate will be divided among the children "in equal shares."

Even though this approach sounds reasonable, it fails to recognize something we all know but rarely acknowledge: it is almost impossible to divide anything equally unless an estate is made up entirely of cash or of identical items.

What About a Family Foundation?

Establishing a private Family Foundation can become a part of Estate Planning discussions, particularly with larger family estates. While at one time it may have been an interesting consideration, new disclosure regulations on private foundations have made their establishment and maintenance more complex.

The strict IRS rules and regulations now related to private foundations make them very costly to families.

Barnabas Foundation provides a viable alternative to the Private Family Foundation through its Stewards Fund. This fund enables families to accomplish the goals they had for their private Family Foundation with additional advantages.