We often use "war stories" as ways to illustrate how easily things can happen in different circumstances.  Today we'd like to share an example of a family group of businesses where things went horribly wrong very quickly. 

The family ran several businesses and all the children were involved in various aspects of the businesses with the elderly father ultimately in control.  He passed away and unexpectedly and shortly after, sadly so did the eldest son who was the next most dominant figure in the family business.  Within days of the son's death, his widow requested to be informed of the family wealth and the trouble started.  For many years everyone in the family had lived out of the businesses and there had never been any real discussion about the future or clarification of the actual value.

The reality was that there was very little accumulated wealth other than land and buildings, which were all owned directly by the parents.  However, the comfortable lifestyle had by all, led the widow to believe that there was a pot of gold hidden somewhere.  A battle ensued in the Supreme Court without any winners as there was a huge mismatch in the expectation and understanding of the situation.  In a short space of time, the family members stopped talking and there was a split down the middle, which never mended again.

Here are the 3 steps we believe that could have been taken to avoid this:

1. Estate planning - the value of a good clear estate plan cannot be underestimated, and this should always be prepared by a lawyer, preferably in conjunction with your financial advisers.
2. Family reality check - it is essential to have open discussions about the family situation with other family members whilst things are still going well.  Whilst they don't need the full picture, they do need to have some basic facts.  Imagined wealth is the biggest risk, so if it doesn't exist, be frank about it.  Even good businesses often have most of their cash tied up in working capital like plant & inventory.
3. Full disclosure - if things do go wrong, then call a family meeting and set out the facts as quickly as possible.  Be prepared to have an open discussion and keep the lines of communication open.

The courts are full of stories like this - don't lose your hard-earned family wealth because of a misunderstanding.  Despite our warnings before and during these events to act and act quickly, they did not, and this scenario went downhill very quickly.  Now when someone tells us "Don't' worry our family isn't like that", then we use this example to show what can happen and how it is best avoided.