Your parents own a business, and you know that the succession plan they’re putting in place is the focus of most of their estate planning — either that, or they’re going to sell the company and give the assets to you and your siblings. Either way, this is a multi-million-dollar business, so there’s a lot on the line and you have a ton to gain.
That’s where the problems begin. You have a sibling who has treated the business as an ATM for years. At first, your parents said no. Your sibling pleaded. They begged. Finally, your parents gave in. That set a precedent that they could never shake. Your sibling has been using the family money for years, and maybe for decades.
How do they use it?
The way that they use the money varies. Sometimes, they want to buy something, like a new sports car or a new house. Other times, they want to pay off debts. Maybe they own their own business and they use your parents’ money to cover up the shortcomings.
But, no matter how they use it, it’s setting up a potential dispute. You and your sibling could find yourselves at odds when that money changes hands from one generation to the next.
The biggest potential problem here is that your sibling is using their inheritance now. But are your parents treating it that way? And, if not, will that cause a dispute?
Say you are all going to get about $1 million from the division of those assets. There are three of you, and two of you are simply waiting for the money. However, your other sibling has taken about $600,000 out of the business over the years.
If things were fair, you would all get about $200,000. But your sibling took it all as they used the company like an ATM. That’s a direct loss for you. If your parents don’t even things out during distribution, maintaining that they want things to be “even,” then you have to ask yourself if they really are even. Or, on the other hand, has your sibling been spending your inheritance all along?
Problems like this can cause serious family disputes. If you find yourself involved in one after your parents pass away, be sure you know what steps to take.