Late night talk show host David Letterman gives his Top Ten list every show. I’d like to suggest to you my own Top Ten list, about ten families who need to set up a trust to protect their assets in the case of disability or death of one of their family members. A trust can be a wonderful device for your family even if your family has just one or two of these circumstances.10. Family number ten is the family that owns real estate in another state. When the family’s owner of that property dies, you will usually be looking at a probate proceeding both in that state (such as Florida, Arizona or North Dakota) as well as a probate in Minnesota. A family trust can avoid a probate proceeding in both states.9. Family number nine are the families who have a family member that is physically or mentally disabled. A trust can provide care for that family member long after Mom or Dad has passed away. What’s more, if the disabled person is receiving public assistance, a special needs trust can provide financial help to the disabled person without jeopardizing his or her public assistance benefits.8. Family number eight is the family that has one or more spouses who are not financially sophisticated. If Dad or Mom was making most of the financial decisions while they are both alive, it’s important that the survivor between the two of them will be able to continue to live in the family home in the lifestyle that they are used to. A trust can help make this a reality.7. Family number seven is the family where a member is not married to his or her significant other. Many people that have experienced a divorce are reluctant to formally tie the knot. If they buy a house, have children or accumulate other assets with their significant other, a trust for them or the family may be a good idea.6. Family number six is the family with a child or grandchild who can’t control his spending. We’ve all seen a young person (or even an older person) who is always short of money and often engages in unwise spending. Sometimes the spending is on drugs or gambling. A trust can provide what we call “spendthrift” provisions that can help protect the imprudent child from himself and his reckless spending habits.5. Family number five is the family with a member who is gay or lesbian. The Minnesota Law of wills and intestates is slanted in favor of straight persons. A gay or lesbian person needs a trust and other estate planning to protect himself or herself and their partner that will level the playing field. A trust can help provide disability instructions and inheritance provisions that assure that the planning wishes of the gay person are carried out.4. Family number four is the family where Mom or Dad might not die at the same time. What this means is that the surviving parent may remarry after the other spouse dies. The new stepfather or stepmother may take the inheritance to which the children of Mom or Dad would otherwise be entitled. A well-drafted trust can deal with this very common situation.3. Family number three is the family who has assets over $200,000. The size of the estate is not always a guide to whether or not to have a trust. However, when the assets are sizeable, the temptations for even upright or religious families can be intense. Possible financial abuse of the parent or the estate becomes more likely. A good trust will reduce the temptations and provide a sensible roadway for handling the assets. A trust can thus promote family harmony.2. Family number two is the family where either spouse has children by a prior marriage. Remember Cinderella? Her Father married her stepmother who hated Cinderella. The Grimm Brothers told that tale because from the beginning of time, there has almost always been hostility between children of a first marriage and their stepmother or stepfather. A trust can address these tensions and provide a roadmap that clarifies the inheritance between children and their step-parent.1. The most common family circumstance is the family that wants to avoid probate proceedings after the death of the parent. Probate can be expensive, stressful and uncertain. What’s more, probate proceedings reveal private family information. A trust can avoid probate and all the loss of time, peace of mind, expense and privacy.There you have the ten families that need a trust. Does one or more of them describe your family’s situation?
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The New Trend in Small Business – The Family Business Council
The days of casually-operated family businesses have come to an end. In order for a small business to compete with large, commercial corporations, successful family businesses have turned from a casually run operation to a small empire run by a board of directors. Some of these savvy businesses have now also jumped into a new trend: creating a Family Business Council.Keep in mind however a board of directors and a Family Business Council are two entirely different things.The DifferenceA Family Business Council is structured more like an open forum and is used to directly resolve issues within the family that are critical in terms of the success of the business. Since often the line between family and business gets blurred in a family-run operation, the Family Business Council provides an open setting where members of the business and family can resolve issues that if left unresolved can lead to confusion, stress and even a business’s downfall.Structure Your BusinessIf you structure a Family Business Council for your small business, it is important to create a foundation of policies that will resolve potential issues that may arise later. Some common policies that need to be created include:Authority and Responsibility – Create a clear definition of who holds what authority and who is responsible for what positions in the company as well as in the family council. Each individual should have a set list of expectations, responsibilities and a clear definition of what their authority entails. In the end, everyone involved in the business should be clear on who they report to and what they do for the company.
Work Hours and Vacation – A set number of work hours/days as well as vacation provisions per family employee should be created as part of the business policy manual.
Office Life – Members of the company should have a clear definition of where their office or workspace is, what work items they will provide on their own and what items belong to the company – family or not.
Compensation and Benefits – A detailed pay structure must be created that outlines each member of the company and how much he or she receives in terms of compensation as well as healthcare or retirement benefits.The Family Business Council should create all of these policies using an “open forum” technique so that no family member or non-family member of the company feels favoritism comes into play in terms of company policy.Getting Started In Your Small BusinessYou can grow your business using both a board of directors and a Family Business Council. Businesses that do not operate with a board of directors should still use a Family Business Council in order to create a fair operating structure for their family-run operation. The initial meeting should be hosted by a business consultant who is not related to the business owners or directly associated with the business in any way. Ensure that the business advisor uses the first meeting to:Create an environment based upon mutual agreement and trust amongst all family members involved in the business.
Give all members of the family council a chance to share opinions about business operations and bring up any underlying business issues they have.
Give the key family members within the business a chance to define goals for the company overall, listen to issues and reconcile any family disputes that ma be directly effecting the company.
Provide assistance to family members when it comes to defining authoritative roles, relationships and the responsibilities of all company employees.The Bottom LineA Family Business Council is a fear-free environment – meaning anyone who attends has the right to speak their opinions without fear of backlash, disagreement or future punishment. It is important for each family member to speak his or her mind in regards to the business operations until the entire group comes to a consensus. By doing so you will grow your business, but also grow your family trust and structure within the company.