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MEDIATION AND SUCCESSION PLANNING

As a Mediator, an observation I have made is that the earlier a conflict is dealt with, the greater the likelihood of resolution.  Therefore, logic would seem to dictate that dealing with conflicts before they even start would be ideal.  An area where this can be done is in succession planning.

Planning for tomorrow is often put off.  Most of us do not take time to think about what is going to happen when we die.  There are a number of reasons for this, but some of the ones I hear repeated in my office are:

1. I am going to be dead so why take the time, energy, and money to plan for something that happens after I'm dead;
2. I am too busy working to take the time to plan ' or die for that matter;
3. This will be too uncomfortable to deal with right now because ' we cannot give to all our children equally/ our son is in a shaky marriage / we have a blended family and there is controversy '(you can finish this sentence in a million different ways).

The reality is that everyone is going to face death and taxes at some point in time.  Therefore, you are just planning for the inevitable.  You are investing time, energy, and money into planning so more of your estate (that you worked for your entire life) is left to family instead of going to pay taxes.

Another reality is that ignoring uncomfortable issues usually does not resolve them.  Some of the issues will be swept under the rug and may only surface after Uncle Bob has drank 4 beer at the annual family get together for Thanksgiving.  Other issues will develop into litigation and the annual family Thanksgiving will get cancelled.  Either result is not ideal.  Succession planning using a lawyer that is trained as a mediator to help work through some of the complicated and more uncomfortable issues can assist in ensuring that litigation does not occur over your estate.

Mediation provides a forum for the uncomfortable issues to come to light so that they can be resolved.  For example, if only one of the children is going to be taking over the family farm and it is only viable if he or she receives the entire farm there are often concerns that the other siblings will not be treated equally.  A solution may be that the other children receive insurance proceeds from a life insurance policy that is put in place.  As the life insurance policy protects the child receiving the farm, perhaps that child would pay the premiums.  This is one of many solutions.

Further, mediation provides a forum where other advisors (financial planners, insurance agents, accountants, and so on.) can be brought in to provide advise and coordinate efforts.

Doing succession planning saves time, energy, and money in the long run - especially if litigation is avoided.  And if time, energy, and money are not reason enough to look into succession planning, do it for the sake of Thanksgiving.

By Stacey M. Johnson
July 21, 2004