Family Matters: Multi-Generational Legacy Planning
How do you prevent money from destroying your family?
By Mark Tsujimoto, Financial Planner
One of the problems facing parents, grandparents and great-grandparents
today is the transfer of wealth to future generations. A few years ago,
The Wall Street Journal ran an article entitled “Lost Inheritance” about how family
fortunes can be dissolved by future generations. The article cites a research
study by the Williams Group which stated the majority of issues in affluent
families arise from lack of trust of other family members and a breakdown
in communication. Here are two real-life examples of situations that could
be avoided with proper planning.
Mary, The Matriarch
Mary was a ninety year old widow who lived independently in her own home
after her husband passed away fifteen years earlier. She had three adult
children, five grandchildren and five great grandchildren. One night she
slipped and fell in the bathroom and was found the next day by her youngest
son, Harry. Not too long after this incident, she decided to sell her
home and relocate to a retirement community.
Mary realized she probably shouldn’t be taking care of her own finances
anymore and solicited help from Harry, who is retired and proficient with
financial matters. After reviewing mom’s financial situation in
more detail, he noticed some items that didn’t make sense. Multiple
investment and bank accounts are intertwined with various registrations
and transactions which include mom, her oldest son and his wife. Harry
realized his older brother, a retired CPA, had been managing mom’s
investment accounts and tax returns since their dad passed away. The problem
Harry noticed was money not accounted for.
At this point, Harry decided to take control of all of mom’s assets
which caused turmoil within the family. A couple years later mom passed
away. Within a couple months a legal battle ensued, and over the next
couple years, large legal and professional fees accrued. In the end, the
brothers decide to discontinue any relationship. Much of this might have
been avoided with earlier intervention of proper legal counsel, family
mediation and professional fiduciary services.
Norm, Family Business Owner
Norm, eighty years old, founded and has operated a successful business
for almost forty years. Today, he continues to oversee the multi-million
dollar company which employs twenty people, and all three of his adult children.
The youngest son assists with running the company and has launched another
affiliated business which now represents about half of their overall revenue.
The daughter is office manager and oversees the day-to-day operations
of the business. The eldest son does not contribute much to the success
of the business and has continual conflict with many of the employees.
In his late fifties, this son still lives at home with Norm and his wife.
They both believe their son will continue to need their assistance.
Norm is in the midst of creating his estate and business succession plan
with his attorney, when his wife suddenly and unexpectedly passes away.
Now he is left working through some complicated decisions while grieving
the loss of his long-time mate. If anything happens to Norm in the near
future, leaving him unable to make financial and business decisions, he
will likely be creating a difficult legacy for his adult children to navigate.
With earlier intervention from professional advisors to create plans for
business succession, tax and estate planning, Norm might not be facing
a potential crisis for his family.
Mark Tsujimoto is a Financial Planner with Cetera Advisor Networks LLC
in Torrance. He is also a member of the Torrance Memorial Professional
www.marktsujimoto.com. (310) 373-7351 ext. 304
DISCLAIMER: Securities and advisory services offered through Cetera Advisor
Networks LLC (doing insurance business in CA as CFGAN Insurance Agency),
member FINRA/ SIPC. The opinions in this blog are those of Mark K. Tsujimoto
of Cetera Advisor Networks. They are general comments that might not be
appropriate for every individual. All information is believed to be from
reliable sources; however we make no representation as to its completeness
or accuracy. All economic and performance information is historical and
not indicative of future results. Information with legal or tax issues
should be relied upon only after consulting your legal or tax advisor.