It is very common as we age to look to our family for support in our affairs. They are the ones who love us the most and often are in a trusted place to offer support as needed or required. I was recently chatting with one of our clients and she suggested that she had been asked about one of their children “coming on to the accounts to help her”. The goal of the task was simply to help track things and give support.t in an emergency. Our client let us know that they were concerned about doing this from both a moral and fiduciary perspective. We agree fully with both concerns. Something that seems so simple and helpful can create some unexpected risks. In this article, we will be looking into some of the better and worse ways to garner support and assistance from your family. As with most things, there are pros, cons, and a healthy dose of opportunity cost. Let’s begin with family structure first, then move on to some common risk areas, and then what we currently believe to be the better ways to accomplish the needed task of allowing those who love us to help.

Family Structure 

In the last few decades, this concept has shifted radically.  We used to think of family in linear terms.  I recall hearing the word nuclear being used to describe families.  Opposite-sex spouses with consangual children, a pet, and a picket fence.   The picturesque Norman Rockwell painting.  Nowadays familial bonds can and do look much more colorful.  Blended families of all shapes and sizes with blended parentage are now very common.  This can really give rise to special planning circumstances and sadly enough enmity across both natural and as good as natural heirs.  I’d like to note that offering someone the authority to have sway over the affairs of others is rarely a gift.  These roles should be served with love and respect, but they bear the work and the legal risks of broken faith if managed poorly.  It is my opinion that the greatest thing a person can do is give great care and thought to who they assign to these types of roles. Not everyone is well suited to be an agent-in-fact, health surrogate, or other key role.  
Discussing money with others isn’t something that is widely considered couth amongst families.  Even the wealthiest ones set aside time for such matters because they are often emotionally charged and can be very vulnerable in discussions.  Our client above has done a wonderful job giving her daughter transparency and vision into the financial picture while not granting her any real authority.  The trouble that most want to avoid is the feeling of eroded privacy and independence.  

There is something about money that causes some to behave below their normal noble selves.  Also, no one wants to appear to require support in being an adult and handling their affairs.  Often even our children whom we love dearly have different sensibilities about things than we do. So, naturally, conflict can arise from those differences.   Just as common, enmity can break out across families over the perception of inequality of responsibilities.  Old family wounds and archetypes can get torn open in these tender moments. So, the structure of the family and the discussion play a key part in accepting support and how we do it.  Some professionals make a great living by helping families peacefully and productively hold these kinds of discussions.  

Key Risks, Mistakes, and Our Advice - Joint tenancy

Situation: Looking back to the client mentioned above, we have seen scores of people who just created a joint tenant style of account and added their children as co-owners.  We think is a huge risk.  First, by giving the joint title you can be seen as giving a taxable gift of the ratio of ownership you have given.  Without specification, the assumption is often equal ownership.  Depending on the size of the account, that can easily complicate tax estate issues and may require an IRS 709 to complete the gift.  Also, in the giving of joint tenancy, you may inadvertently give away your right to legal action if your co-owner spends money in a way that you do not approve.   As a joint owner of the account, they have the right to deal with the money as they see fit.  I will not say there is no legal recourse, but I will say that this is a problem that may be easier to avoid than to litigate.  Finally, there is a liability issue at play here.  If you or your children find themselves having to pay monetary damages based on a legal matter, the shared ownership of your assets may provide a keyhole to attachment and the loss of those assets from a legal matter you had nothing to do with.

Our Advice:  We think that accepting your responsible and well-adjusted adult beneficiaries’ assistance is great for both parties, but as listed above it can be problematic.  We think the solution for account-level oversight is best handled by some form of agent power.  I have seen various names for these.  No matter what the bank, brokerage house or other institution calls them, they offer various levels of authority without ever completing a gift or opening any doors of liability.  If the ability to remove money is granted, typically it can only be removed as a payment made for the benefit of the owner of the account, so this generally avoids the risk of misappropriation.  On the lower end of the spectrum, most institutions grant inquiry or viewing access, which allows oversight and discussions to be had but no changes to be made.  A durable power of attorney usually allows access, trading, and distributions made payable as listed above. This power is broad-reaching but limited.  There are many names for assignments in the middle.  We suggest reaching out to the institution to see what is available, and seeking legal counsel as needed. If your family has a trust and you name trustees, those trustees are only limited by the powers granted through the trust.   As you can see, various types of agent authority are easy to establish and can sidestep several problems in a single document. 

Shared Legal Powers

Situation:  Sharing is something everyone with siblings is exposed to early in life.  In candor, not everyone is good at it.  Not everyone plays nice with others, and many siblings grow up with harsh feelings based on the perception of either being or not being the favored child.  The family we have referenced in this writing is blended, and each spouse came to the marriage with their own children.  So, you can imagine there is plenty of room for sore feelings between the siblings, especially with the step-siblings.  We have commonly seen parents try to avoid these issues by assigning responsibilities to more than one person.  Parents often will tell me that their kids get along and that they don’t want to favor one or the other, so they choose to force them into cooperation.  They have now placed an implicit requirement that the siblings align their views to proceed with whatever matters are at hand.  Forcing people who don’t typically agree to come to the table can stymie even the simplest of choices. Sadly, when dealing with financial or health issues, there may not be time for infighting.   Just as frequently we have trustee trios.  This arrangement may force one person to choose a side between opposed parties.  Being the swing vote can quickly cause hurt feelings and escalation of family matters.  This is especially egregious if there is a surviving spouse, and two children are co-trustees.  The swing vote here is not an enviable position.  

Our Advice:  As we have written in prior posts, many responsibilities may be requested, or required as we age.  As hard as it can be, we suggest assigning just one person at a time to any role that is required.  Having to face the real capacities of your children can be heart-wrenching.  Assigning one over another can create negative feelings across the family.  We feel it is better to address such issues before the powers are needed as opposed to having them possibly flare up in moments of heightened emotion or family stress.  Deep consideration should be given to those asked to serve in roles like executor, health surrogate, trustee, or power of attorney.  In some cases, you want someone responsible, dispassionate, and decisive, while in others someone more caring and patient may be a better fit.  Across your family, you may or may not ask the same person to serve in more than one capacity.  Assignment of these powers can put a great deal of stress, time commitment, and litigious risk on the chosen person.  As such, your first choice may be unwilling or unable to serve.  To address that risk, it is also suggested that you consider successor roles.  Instead of assigning more than one person to a role you may assign a backup in case they are needed.  We admit none of these are easy choices, but we all must make them.  

Summary

While no one wants to look ahead to their incapacity or demise, the most loving thing we can do is give our loved ones clarity about our intentions.   It falls to us to draw hard lines for the greater good.  It seems a little silly to say, but when the powers we assign are needed we generally aren’t able to clarify the intentions of our approach.  So, while we are lucid and capable, we need to be clear about who we’d like to support us and how intend that support to work.  We encourage a written letter to the family that accompanies and gives context to the very dispassionate legal documents we all need.  Such preambles are a great way to ensure that your spirit and considerations can echo through time.  It’s okay to write about the reasons for your decisions so that those affected can be clear about why you set things up the way you did.  We feel that these reasons are imperative to the healthy coping of your family.  In the vacuum of context, all people conclude. There is something in human nature about drawing negative ones over positive ones.  Do you and your family the biggest favor you can, be clear and concise in the naming of your powers, and your reasons for so doing.  If you’d like support in the consideration or drafting of these kinds of plans, we would love to help.