Collaborative Civil Consultation
The objective of civil consultation is to assist family businesses in decision making that addresses both the continuing success of the business while simultaneously protecting healthy relationships. Dr. DeMaio’s goal is to provide a decision making model that includes personal and relationship issues.
Consultation to Family Businesses
Family businesses are often challenged facing succession issues and cultural transformation when integrating non-family leadership. The first challenge is determining “fair and equitable” treatment of the principals through objective metrics such as tenure, contribution to profit, roles and responsibilities. The second challenge is assessing the personal impact of business decisions on family relationships. When these challenges are not faced, family businesses may be financially successful, but pay a price in their personal relationships.
“Fairness in family businesses is a critical standard more complex to objectify.”
Transitioning the traditional “family business model” to a professional business culture can be daunting. This transition frequently benefits from professional support to facilitate the implementation of a new business model while protecting family relationships. Deciding when the best interests of the business require expertise beyond the talents of family members is a difficult choice.
The first difficulty is knowing when to bring outside professionals into the process. The second difficulty is identifying professional consultants that have expertise both in business and family process. Finally, the costs of the consultation must fit within the limits of the financial structure of the business.
“Addressing ‘intangible assets’ such as family relationships as well as tangible assets is essential.”
Fairness in family businesses is a critical standard more complex to objectify. It is different from other businesses where functional performance is the primary standard. For family members “equality” is generally viewed as the litmus test for fairness. Reward based on functional contributions may be seen by family members as neither fair equal nor equal.
First generation entrepreneurs are frequently faced with conflicting needs between business interests and the capabilities of successor generations. Family businesses often struggle with selecting the most capable child, rather than best qualified candidate available who may not be a family member.
“The role of the mental health coach is often exceedingly complex.”
There a number of predictable “set-ups” for conflict in the family. These set-ups may result from a lack of clarity in the business model. When the culture remains an undifferentiated family business, even when the business has grown exponentially, common family dynamics may undermine both business and relational functioning. The list of common problems is extensive.
- Succession issues and control
- Asset allocation: when equal is not fair and fair is not equal
- Buy sell agreements
- Hidden agendas
- Parent-child conflicts
- Sibling rivalries
- Unidentified coalitions
- Secrets that inform some members, but not others
The role of the mental health coach is often exceedingly complex. It includes empowering all stakeholders in the process by ensuring that each member has a clear voice in the planning and operation of the business. Addressing “intangible assets” such as family relationships as well as tangible assets is essential. The coach must assist in the creation of a common vision for all stakeholders. Finally, the coach serves as a neutral advisor promoting the best interests of the business and the family.
Closely Held Businesses and Partnerships
Many of the challenges faced in family businesses are equally problematic in closely held businesses and partnerships. The emotional relationships between partners may interfere with the best interests of the business. Partnerships and closely held business frequently trigger family type dynamics. These dynamics are addressed by HerschDeMaio with balanced attention to the needs of the business and the dynamics of the relationships.
Collaborative Estate Planning Process
There are a variety of legal vehicles available to transfer assets in an estate including wills, trusts, or various types of partnership arrangements such as LLC’s. This is particularly true when parents have a vision of providing successive generations the opportunity to share a commonly held property such as a vacation home, farm or other tangible asset. In principle, this is an admirable goal, in practice it is often another set-up for conflict and antagonism.
- Parents who wish to leave businesses or other tangible assets to their children have a special challenge as they undertake estate planning.
- Parents often feel trapped by children who have greater needs, perhaps as a result of poor planning and life decisions, leaving them dependent.
- In contrast they may feel guilty allocating lesser assets to hard working more successful heirs.
Special needs children are always an important challenge. They may have limited potential to provide for themselves. As a result, parents may feel the need to allocate disproportionate assets.
Dr. DeMaio’s Approach
The planning process is holistic estate planning that employs collaboration in shaping plans that seek fairness and equity for all members of the family. This approach can avoid post-death conflicts or contests. It addresses client needs to satisfy their desire to transfer both a positive financial and familial legacy.
There are two central innovations of this estate planning. First, there is full participation of adult beneficiaries who can express their concerns and hearing those of other family members. The early inclusion of heirs in the planning process allows potential input into the plan and a clearer understanding of the older generation’s goals. When all stakeholders participate in the process they come to appreciate the “contingencies” that shape the decisions made by the granting generation. A variety of tools and processes can be utilized.
- Retreats empower each stakeholder to express their views clearly.
- Brainstorming identifies new strategies.
- Facilitated private conversations between members open communication.
These tools can avoid hard feelings or later legal challenges.
The second innovation in the estate planning is the introduction of a collaborative interdisciplinary process. Collaboratively trained professionals include mental health coaches, attorneys and financial planners are included in the process. Complex family dynamics are translated into an equitable financial estate plan which promotes family communication and community. In the collaborative process all parties are represented by an attorney trained and committed to collaborative practice. The same standards are true for the mental health and financial professional.
This approach includes all stake holders. While parents often are reluctant to share the details of their estate planning, the inclusion of all beneficiaries prevents future unpleasant surprises and conflicts. Parents still may alter their plans in response to new developments. Parents gain assurance that their children will feel fairly treated and will be able to work together harmoniously. This is especially important if the plan requires future cooperation in the maintenance and management of the shared assets. Parents and children also gain assurances that there are adequate plans for their parents should they become dependent or incapacitated. Finally, holistic estate planning promotes intergenerational communication that reinforces family values.