By Carolyn Thompson
We have a principle in our office simply called The Clarity, Certainty, Simplicity Principle. Each of our team members has this Thompson Law principle permanently affixed to their work-space as a reminder to be clear, straightforward, and definitive in every communication we have with each other and with those who contact our office. The Thompson Law, PC team members believe that a message which meets all 3 components reduces confusion and provides peace of mind in making decisions. It’s a “no surprises” policy.
This same principle applies in creating quality estate plans. As we meet with clients, we work through The Discovery Process to help them identify their goals and fears as well as other life circumstances that need to be considered when developing a true legacy plan. Through that process, we can then draft a plan that clearly addresses those specific concerns, that specifically details how that plan is to be administered, and provides certainty to those who are left to administer the plan. We develop the framework, so loved ones are not guessing on how an estate is to be administered.
But there’s one area where people often get stuck with estate planning: Fairness. Parents have an understandable vision of treating their children fairly. Traditional planning approaches often address this fairness goal simply distribute my estate to “all to my children in equal shares.” This approach may be perceived as fair, but in practice it is often a disaster. The problem with this planning in many situations, particularly when a farming operation is involved is that this type of planning is too “vanilla.” While it is simple, it lacks clarity and certainty. How do you divide up a farm in “equal shares”? If there are still farming heirs, equal shares is the equivalent to asking him or her to golf with 2 clubs instead of a full set. Even if your children can overcome the hurdle of who gets what, other operational questions still remain: does the operating farmer have the right to rent the ground, and if so, for how much? What if land is owned by multiple siblings and one sibling wants to sell? How do you value the equipment? Is the operator expected to come up with cash in nine months or less after the death of a parent? Who is going to harvest the crops? How is that person compensated? How is the grain going to be marketed upon death? Is the life insurance used for debt or estate taxes or can the named beneficiaries “take the money and run?” How will you value the operating site? What about the improvements the operating son made on the operating site, will he pay for those again? Is there a purchase option for the farming child? Can he afford it? Does he want to go into that much debt at that age? When it comes to a farming operation, there is much opportunity to provide clarity and certainty.
For parents who aimed for fairness through simple planning in order to preserve family harmony, too often I have seen this type of planning backfire and create more discord among siblings after the parents have passed away. This lack of clarity, coupled with the emotional loss of a parent, can have disastrous effects on family harmony. I often hear stories of how siblings haven’t spoken in years due to fights that have ensued after a parent has died. The parent may have had a will or a trust, but it lacked The Clarity, Certainty and Simplicity Principle. That lack of clarity can cause pain that lingers on for generations to come. Sometimes I will hear people say, “If one kid gets more than another, the kids will fight and be upset with one another.” In my 18 years of experience, that has not been the case. When a parent puts a plan in place and makes the decisions as to who gets what, when, and for how much, the children know what mom and dad wanted. It is in black and white. There are no questions (if it is well drafted). On the contrary, when children are left on their own to “divide in equal shares,” that’s typically when I see or hear of more family feuds. I’ve heard farming heirs say “I’ve worked this farm for 40 years and now my siblings want top dollar rent.” Who determines “top dollar rent?” In the end the children are forced, each from their own perspectives and often competing interests, to determine what is “fair.”
Take the time now to incorporate The Clarity, Certainty, and Simplicity Principle for your children. Don’t ask your children to guess what mom and dad would have wanted; work with a quality estate planning attorney who will guide you in the creation of an estate plan customized to your specific goals and life circumstances. Qualified estate planning attorneys have the skills and experience to help craft your vision and use that vision to lead to decisions. In my experience, if parents will make decisions and be clear, the likelihood of their children getting along is vastly improved. And what a true gift that harmony can be when the family tree has been shaken by a loss. When a family is rooted and grounded in solid planning if can weather the stems that come.
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