At a recent board meeting of the Juan Perez Mall Pizza Franchise an amazing event happened. The two sons who had been running the business successfully for years all of a sudden found themselves looking for a job. Their Mother and two sisters had voted to strictly curtail their activities and were bringing in a new Management Team. The family, which was never particularly close was now on the brink of disaster a few short years after the death of the patriarch. As the sons walked out of the meeting, one whispered to the other “I think its time to call our lawyer.”

High on the list of difficult subjects for families and others to talk about is money and inheritance. In the literature on addictions and other family dysfunctions, family therapists often call this the proverbial “elephant in the living room”. This metaphorical expression is used to describe a situation when a family is sitting around their living room, and in the middle of the living room there’s an enormous elephant standing in it which no one mentions. So it often is with money and inheritance.

This is a case in point. Papa Perez was a good man, who has worked very hard his whole life building his restaurant business from one small restaurant to ten establishments across Colombia. He and his wife had four children, two sons who have been working in the business for over twenty years. The third, Maria, an architect who married an American Surgeon and lives in Baltimore. And lastly, there is Sally who never married, has had trouble sustaining a job and lives alone in a small apartment in Bucaramanga. Maria, Sally and their Mom have been very close. Likewise the two sons are a good team.

Little attention has been paid to estate planning. About twenty years ago, on his wife’s insistence, Papa Perez went to an Estate Planner who assisted him drawing up the papers making sure that he stayed within the law and avoided as much taxes as was legally possible. Papa found the whole experience rather unpleasant and was focused on not paying too much in legal fees.

He never discussed any estate issues with his family, believing that the jealousies and rivalries of his children would make any discussion unproductive. His estate planner actually felt similarly. Although he did not say anything outright to his client, he suggested that the patriarch simply sign his will and estate documents and that these would be distributed to the family members upon his death. In fact, this is what happened and what a mess it was to behold.

Papa Perez, as is often the case, had been holding the family together, solving sibling rivalry issues, sending money to his daughters to help them out and providing for his grandchildren. He had not had any substantive discussions with his wife or children about his wishes to hold the business for the third generation or a way for shareholders who were passive owners to be bought out of the business if that was their wish. He never conceived that he was leaving his sons with an enormous burden of dealing with their sisters as owners of a business they were never interested in.

The real tragedy here is that the whole problem could have been avoided. This family refused to talk about the elephant because they were afraid that more elephants would appear. Therefore, the jealousies, hurt and resentments all grew to the ultimate destruction of the family and the business. Had the Estate Planner insisted on family meetings between the patriarch, his wife and children (with a competent Family Business Coach), then sane rational solutions could easily have been found that preserved the business, the family and the wealth.

Obviously estate plans have an enormous impact on the family. When a business is involved, the relationships and financial issues are ever more complex. The key is looking at the needs of the patriarch, of his wife, each child and the business. Careful planning should be facilitated by the Estate Planner to begin these discussions in the family – while the patriarch is alive. Although these discussions are extremely delicate, they are part of what can preserve the family and the business.

A following article will discuss how these dialogues can take place.

Marc@sii-inc.net