Three principles should guide practice management when families are involved:
* Understand the perspective of each family member;
* Keep in mind who the client is; and
* Advise in the client's best interest.
The following case study illustrates how each principle works in practice:
FAMILY MEMBERS' PERSPECTIVES
Betty, a surviving spouse, has two children, Sally and Constance. A majority of Betty's estate is in rental real estate. Betty does not want to leave money outright to Sally, because Sally's husband has had two failed businesses, and Betty is concerned that he will burn through his wife's inheritance. Constance has a degree in finance and works as a money manager. Betty would like to have Constance receive her share of the estate outright and to be the trustee of a trust holding Sally's share. Betty also believes that the trustee should maintain the family rental properties for at least 10 years.
To determine an estate plan, the CPA meets with Betty's children. Sally claims privately that her mother has been extremely ungenerous and constantly belittles her and her husband.
Constance is concerned that being in charge of Sally's trust will cause a rift. She confirms that Betty has not been generous. She also mils the CPA that the rental properties have significant amounts of deferred maintenance and she is too busy to manage them properly, so she would prefer to sell them after her mother's death.
WHO Is THE CLIENT?
The CPA must deal directly with and focus on the needs of each client individually Although it is good practice to talk to Betty's children as part of overall estate plan development, all recommendations need to be delivered to her. Therefore, while it is proper to discuss with Betty her daughters' concerns regarding the estate (without sharing personal remarks made in confidence), it is not proper to disclose Betty's wishes to her children without her authorization. Conflicts of interest must be avoided. The client relationship and success of the planning depend on trust and communication.
ADVISING IN THE CLIENT'S BEST INTEREST
The family members' perspectives in this case do not match up well with Betty's intentions for her estate. How could the CPA remain discreet and diplomatic while encouraging Betty to re-evaluate her plan? It may be useful to ask open-ended questions such as:
* How does Constance feel about being trustee of Sally's trust?
* How would managing real estate fit into Constance's lifestyle?
* How does...