MAKING CENTS: How to avoid a financial family feud

All too often families fight about money. Commonly these feuds begin over real estate, family businesses or care decisions for aging parents. No parent’s dream for the future of his or her family includes disownment or troubles among the siblings, yet parents are most often the ones to blame for the problems.

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Preventing future feuds can be accomplished through clear communication and creating a plan surrounding the financial assets. I’ve personally witnessed many parents avoid the significant decisions and communication required. They all seem to assume that the situation will work itself out. That does happen, but not without heartache and estrangement.

Real estate, whether it be rental property or that memorable vacation home, are constant problems. The two main issues here are maintenance and usage. On the maintenance front, there may be one or more child who is capable and interested in maintaining the home.

Typically there is a child who wants to sell the home, one who wants to keep the home but can’t afford to, and one who wants to keep it and can afford it. What parents need to do is place the property into an entity such as a trust and endow it with cash for future maintenance. The directives in this trust should be based on the parents’ vision for how they would like the situation to end after their demise.

Family businesses frequently have a similar fate as real estate, but with a different twist. The twist is nepotism versus ability. Most business consultants would agree that business owners have a fiduciary responsibility to their customers, employees and family to adequately plan for the succession of that business. If all children are active in the business, it may make sense for all to inherit or buy that business. But that doesn’t mean they are all equals in terms of abilities, titles and responsibilities in the operation; and that issue needs to be addressed well in advance of any succession strategy.

Caring for aging parents is another cause of family feuds. Whether it is over unequal time spent in delivering care or the division of assets post mortem, this, too, can be avoided.

Long-term care insurance is one solution, but not everyone can afford or qualify. The other is simple and direct communication. Too many parents have a secret plan where they expect care from their children.

John Napolitano is a registered principal with and securities offered through LPL Financial. Member FINRA/SIPC. He can be reached at 781-849-9200.

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