Remember the conversation between Alice and the Cheshire Cat in Lewis Carroll's story of Alice in Wonderland? "Would you tell me, please, which way I ought to go from here?" asked Alice. "That depends a good deal on where you want to get to," said the Cat. "I don't much care where" said Alice. "Then it doesn't matter which way you go," said the Cat. "So long as I get somewhere," Alice added as an explanation. "Oh, you're sure to do that," said the Cat, "if you only walk long enough."
Many, if not most, people struggle with a similar dilemma when it comes to deciding how to handle an asset that is shared within the family. The most obvious type of family asset is a family business, but such assets can also include a cabin or other real property, a timeshare or other resort program, or even vehicles that parent/children or siblings have restored together.
When it comes to knowing what to do with that type of a "family asset," people can feel lost; they know they should have a plan for continued joint ownership or eventual sale of the asset, but they aren't certain what, when or how to do it.
Similar to Alice, without a vision of where they want to go, but knowing they need to go somewhere, they are likely to continue to do nothing or wander in their search for what to do.
Families that want to avoid this maze of confusion must first understand and agree on what they want to happen.
Take, for example, a family cabin that the parents purchased when their children were small and which the family used every year for summer getaways and long holiday weekends. It represents years of great family memories and is part of the "glue" that the parents hoped would keep the family together.
But now the children are grown and leaving the house; some have left the area and others have even left the state, possibly for good.
Everyone loves going to the cabin, but the chances for everyone to be at the cabin at the same time are decreasing; the costs in time and in money to maintain the cabin are now becoming an issue.
The question we ask of clients who find themselves in such positions is "What do you want to happen under this new normal?" If the answer is "we want to keep the cabin in the family no matter what," we explore what that decision looks like five, 10 and even 20 years down the road; often, that perspective is enough for the family to change their collective mind and sell the cabin and use the proceeds in some other way to benefit the family.
If the asset is not a cabin, but is a family business, the questions are different and, normally, much more complex. If one child wants to own/operate the business, but the others are not interested, we have to decide how to divide the estate.
If the business does not produce enough profit to divide things equally, that poses other complicated questions because a "fair" division of the profits is not necessarily the same as an "equal" division.
In short, a family's plan to deal with a family asset must be based upon the final outcome it wants. And, as with Alice, very often the worst outcome is the one that follows no decision at all.
By contrast, a family that is serious about creating a meaningful long-term plan for the family asset will obtain the desired outcome and do so at much less cost and stress than having no plan at all.
We discuss these, and other, estate planning matters in our no-cost seminars. Our next seminar is at 3 p.m. Aug. 21. There will be limited seating (no more than eight people), so we can focus on the specific questions of a small group. If you are interested in attending the seminar, or if you have any questions about this article or topics you would like us to address in future columns, send an e-mail to admin@GJlawyer.com or call 970-270-1213.
Brad Wright's business and estate planning practice includes transactional and litigation matters with a special focus on business succession. His brother, Steve Wright, has a similar law practice in Idaho Falls, Idaho, and, together, they assist businesses of all sizes and types with a wide variety of legal issues.
© 2019 Brad R Wright, Steven J Wright