Forget Family Feud, Think About a Family Agreement
Opinion Advocates for ideas and draws conclusions based on the author/producer’s interpretation of facts and data.
By Allen D. Feller, Esq.
Estate and long-term care planning options sometimes favor one or two family members at the expense of others.
The peculiarities of Medicaid regulations treat certain asset transfers as penalty-exempt based on a person’s status or living arrangements with a parent. Assets may be protected, but feelings are hurt. Verbal promises provide zero comfort.
With my father’s family, some tense holiday conversations would be quickly shut down upon the appearance of a Carvel ice cream cake. Fudgie the Whale never failed.
Unfortunately, no ice cream cake was available for this meeting. So, I offer the next best thing. “Ladies and gentlemen, behold the family agreement.” The expressions change from offended to puzzled. What is a family agreement?
A family agreement is exactly what it sounds like – a written agreement which stipulates certain actions to ensure that family members are included in the planning process. Signers usually include a parent and the child who will be benefitting from the initial transaction.
The family agreement directs the benefiting child to provide equal shares to the other family members. When a son or daughter arranges a loan or transfer of funds from a parent, their siblings may feel that this transaction is sneaky or suspicious. Family agreements take these financial and legal dealings out of the shadows.
Besides full disclosure, family members will also feel secure that a legal writing guarantees that their intended share of a parent’s assets is not diminished or eliminated. More importantly, family agreements provide parents with a vehicle to maintain family harmony by showing their kids that their intentions are positive and equality-based. That does the trick. The siblings exhale and smile. It is understood that everyone’s interests have been addressed satisfactorily.
A signed and notarized agreement offers legal protection far above verbal promises to pay. Family agreements can be tailored to cover many types of family financial planning issues including real estate transactions, personal loans, living and rental arrangements and personal property. Think of all of the family squabbles and blow-ups that were caused by misunderstandings over money.
Family agreements may also be paired with wills and trusts. Changes in estate planning goals due to an earlier transfer of assets to a single child may require coordination between a will, which may reduce that child’s legacy, and a family agreement compelling that child to reimburse his siblings out of money now in his control. Family agreements fill in the planning gaps.
Thoughts of favoritism are always present when multiple siblings deal with each other and their parents. Secrecy and omission are poor ways to deal with real world family finances. If easy communication is not realistic, then a family agreement can remove a great deal of built-up pressure and distrust. In the absence of ice cream cake, it is your best option.
Contact the professionals at the Feller Group, P.C. today to learn more about family agreements.
Alan D. Feller, Esq. is managing partner of The Feller Group, a law firm dedicated to the practice of elder law and estate planning, located at 625 Route 6 in Mahopac. He can be reached at afeller@thefellergroup.com.
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