One of the greatest issues that can break families apart is money and money-related matters. Fortunately, there are ways to overcome feelings of ill will between siblings across a wide variety of tricky financial situations. Let’s explore how to address some of the most common sticky situations and prevent them from festering into a lifetime of resentment.
Tom O’Gorman, partner at AP Wealth Management, said a common issue is when illiquid assets are part of the inheritance. These include possessions like homes, cars, jewelry and art. Some siblings may need cash right away and want to sell these assets. Other siblings may want to keep the assets intact.
Avoiding conflict over a disproportionate inheritance, or one where there are illiquid assets, requires transparency between parents and children as to how these possessions will be distributed.
“Face-to-face family meetings on this topic should take place so there are no surprises when the will is executed following the parent’s passing,” O’Gorman said.
O’Gorman said the parent leaving the inheritance has a responsibility to have their will written in such a way as to mitigate any possible arguments between siblings. This includes direction as to the disposal of illiquid assets and explanations for any disproportionate allocation to siblings.
Family Business Succession
David Frederick, director of client success and advice at First Bank, said one financial situation that can get extremely bad among siblings concerns a family business. Business interest is more than an inheritance. It’s an ongoing responsibility that requires prudent management, an investment of time and constant care.
This is also a financial situation in which there may be perceived favoritism in succession planning.
“Some individuals are offended when the parents leave their siblings in charge of the family business instead of them. They take offense at a perceived slight that mom and dad did not trust them or respect them enough to believe they could run the business,” Frederick said. “Even worse is when mom and dad left one child in charge of the family business, but the other siblings still get to take a share of the profits. In such cases, the managing sibling will often resent having to work so hard just so their non-working siblings can take a piece of the action.”
This type of resentment may grow to become baked-in amongst siblings — and the business itself, passed along to the next generation, may not stay in business for too much longer.
What can families do to avoid this situation? Frederick recommends planning, often and by including professionals who are not emotionally invested in the situation. Including a professional financial advisor in the family meeting allows the advisor to take part and act as an independent voice to help moderate the meeting.
“The best way to avoid sibling resentments is to meet regularly as a family with a professional financial advisor to review family assets and discuss the likely estate plan. This may be an awkward conversation, and some parents may not want to share financial specifics with their children, but it is better to have at least some open communication ahead of a parent’s passing than have a parent die and siblings start to resent each other,” Frederick said.
If there is an instance where extra help is needed, Frederick recommends including a professional counselor. Professional counselors may also attend these meetings and offer insight and guidance.
Changes in Wills
It’s already tricky enough to navigate wills, existing or where there is a lack thereof, with siblings. But, few consider the stickier situation that is a changing will. If a will is changed in the latter stages of a parent’s life and one child is favored over another, it can create ill feelings among siblings.
Ultimately, O’Gorman said that siblings must respect the wishes of their parents whether or not they like the outcome.
“It’s their parent’s estate, not theirs and they have no claim on it other than what the parent directs to them,” O’Gorman said.
That being said. O’Gorman said it’s vital that parents consider who acts as the executor of their estates. If the executor is not one of the children, such as a lawyer or financial advisor, a non-interested third party will settle any gray areas and save years of triggering emotional conflict and heartache amongst siblings.
How You Can Do Your Part
Clearly and honestly communicating about money can be difficult for most siblings. Brittney Castro, financial expert and Mint’s in-house certified financial planner (CFP), recommends siblings do their part by taking a step back to assess how to manage their side of the equation. Castro said you can do that by hiring a financial planner to help organize your finances or an attorney to learn how to review trusts and estates and better understand your rights to any family money.
Even if you disagree with your siblings or find the conversation is not going the way you expect, Castro said to be courageous enough to have them and do your best to maintain an open dialogue.
“Learn to listen to one another and remember that as much as you want your opinion to be heard, the other person does too,” Castro said. “By being compassionate, you can aim to make the situation something all parties can learn and grow from.”
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