Alexandria Nadworny, a vice president and wealth adviser at Akron, Ohio-based Sequoia Financial Group, offers insights into navigating the dynamics surrounding guardianship for a family member with a disability. In her conversation with Crain Currency, she discusses how families can take proactive steps to foster positive outcomes and create a supportive environment for everyone involved.
An issue that high-net-worth families struggle with but may not talk about is the challenges of guardianship involving a family member with an intellectual disability. How often do you see this, and what are the challenges?
Guardianship of a person with special needs can cause several issues within a family, especially if the family has a history of not seeing eye-to-eye with each other’s lifestyle choices. The guardian has a lot of control over the person under guardianship, often referred to as the ward. Guardianship is overseen by the state courts where the individual lives and is appointed by that state. If the courts witness harm to the ward for any reason, the courts may appoint a professional guardian who likely does not know the ward personally. A professional guardian can be extremely challenging to remove.
A guardian is responsible for making a variety of important decisions on behalf of the disabled person — which can include personal-care decisions such as where the person will live, what they do during the day, who will provide their care, as well as budgeting and financial management. When families disagree about who should serve as the guardian, courts can get involved if mediation does not resolve the issue. This process can also harm the person under guardianship, especially if special needs or medical conditions are not appropriately addressed during the contested guardianship.
Can you provide an example or two of situations where this occurs?
Surveys show that the rate of divorce in families with a child with special needs is much higher than the national average. Denial is often present, as are unrealistic expectations for the child with special needs, which can cause pressure on the overall family. One parent may feel that focusing on vocational skills is more important than a higher education. Even simple disagreements over what the child is eating can require a guardian ad litem and the courts to assist with the decision-making.
Siblings can also disagree on what the future looks like in terms of guardianship. Often one sibling does not have the time to commit to day-to-day responsibilities of guardianship but wants some level of involvement and for any future roles to be “fair.” It is worth noting that the guardian does not need to, and typically does not, live with the adult person under guardianship. All of this goes to show how critical it is to do planning and to revisit that planning regularly with all impacted members of the family so that everyone is on the same page for the long term.
How can families best respond in these types of occurrences?
Families should fully understand the responsibility of the guardian in the state they are living in, as guardianships vary from state to state. There are also alternatives to guardianship if the person being considered to go under guardianship has some competency. Alternatives include power of attorney, health care proxy and, in many states, supported decision-making. When possible, the person with special needs should be empowered to make their own decisions. Families can always utilize other ways to keep their loved one safe, avoid exploitation and assist with decisions.
What can be done from the start to be proactive about dealing with a family member with a disability?
Communication can never start too early. We often advise families to complete a "letter of intent," which is a helpful tool that can be used to begin a conversation on the disabled person's abilities, understanding the disability and what the day-to-day looks like [now and into the future] for the individual so all can understand what roles are needed for the person to have a full life. Often one person maintains most of the person's medical and social information, which can make it clear for the family who should serve as guardian as the person gets older.
There are other roles, such as trustee, and informal roles that are just as important — such as just being a friend. Looking to extended family, friends, teachers and neighbors should not be forgotten. Getting these people together can be quite powerful to develop a team for the loved one. No one can replace a parent, but a team can continue on in a coordinated fashion so that no balls are dropped.
Finally, family therapy and family meetings can provide a space for conversations that can be quite emotional. Getting others involved, especially professionals who have experience in managing guardianships, early and often provides much-needed support and reassurance for all and usually the best outcome for the person with special needs.
The family office next-gen sandwich: Keeping generations together
By CHARMAINE TANG and RICHARD WOLKOWITZ
As Ralph Waldo Emerson said: “Life is a succession of lessons which must be lived to be understood. All is riddle, and the key to a riddle is another riddle.”
Succession conversations and related issues are lurking in the background for most enterprising families — particularly within family offices, which have dynastic intent. The financial and nonfinancial aspects are complicated, and the supporting structures are complex. With individuals living and working longer, and with multiple generations participating in and being supported by the family office, it is becoming increasingly frequent to find three or more generations concurrently active in the family office.
Is this a dilemma or an opportunity?
Not that the British royal family is the perfect example, but there are certainly some parallels. As we saw over the years, it was fascinating to observe Queen Elizabeth II grooming her grandson Prince William for leadership — seemingly overlooking her son, Prince Charles. “Granny” was focused not only on Prince William but also on his wife, Kate Middleton, the Princess of Wales, for the succession and professional responsibilities of their future roles in the monarchy.
To explain this three-generation phenomenon on this side of the pond, Americans would use the metaphor of the club sandwich. A classic and favorite sandwich in the States, we delight in the club’s complexity: layers of bread filled with chicken, bacon, lettuce, tomato and cheese — then sliced in quarters. However, because the club is multilayered and multitextured, the primary challenge is keeping it together and preventing it from falling apart.
At a recent family office gathering, the question was asked, “How many of you in the room have been a next-gen?” and everyone raised their hands. The next question asked, “How many of you are still a next-gen?” and the majority raised their hands. This pattern is now more of a trend rather than an anomaly, found in family offices on a global basis.
We lovingly coin this trend “the next-gen sandwich,” where the leading generation (G1) is passing over their next-gen (G2) children for their next-next-gen (G3) grandchildren. From an age perspective, G1 is typically in their 80s and 90s, G2 in their 50s and 60s, and their children in G3 range from their 20s through 40s.
With increasing frequency, we see G1 bypassing G2 for G3.
Through these actions, the message is delivered as “Your G2 parents have not met our G1 expectations and are unprepared ‘slackers,’ so we will devote time and resources to educate and train you, our grandchildren.”
In this scenario, G2 is passed over, and resentment and jealously often erupt against both G1 and G3 by G2. As a result, G2 is the sandwich generation, and family dynamics become increasingly challenging.
We’ve heard this statistic ad nauseam: We are currently in the middle of the largest transfer of wealth in human history, valued at about $60 trillion to $80 trillion over the next 25 years. We are seeing this realized as baby boomers transition and/or sell their businesses, retire and/or die and pass on their wealth, including family business, to their heirs.
Said Dr. Doug Gray, author of The Success Playbook for NextGen Family Business Leaders and founder and president of Action Learning Associates: “This is a major worry among business families, which is why there is a need for training and coaching to ensure that the next generations are well-equipped to inherit the organization and allow for an orderly transition.
"As a behavioral psychologist, I focus on what people say or do. I’ve learned that family enterprises are more complex than any other type of business.”
Gray focuses on giving the next gen clarity and confidence to inherit the family business and wealth, while helping the leading gen plan, trust — and let go.
“Many next-gen family business leaders I've talked to feel alone and alienated," Gray said. “Some say that they are trapped in the family business, which is about as negative as it gets!"
Chip Fisher, principal at Ursus Advisory, provides peer-to-peer consulting for young adults with inherited wealth. Fisher is uniquely equipped to work with ultra-high-net-worth next-gens on the psychosocial issues involved with inherited wealth, as he himself is a next-gen family member.
“Anyone who inherits great wealth,” Fisher said, “should self-examine between the ages of 21 and 40, ideally, in order to live a full and productive life, to rule their wealth rather than have it rule them.”
In principle, he understands why families are now skipping generations when distributing wealth. “However, in some cases, skipping generations can create havoc when the G3 grandchildren acquire asset superiority at too young an age,” Fisher said.
Case study: The T family
The T family is an American family that has grown its multigenerational wealth through the family business, an industrial company. There are four generations: The G1 matriarch and patriarch are still active in the business and in their early 80s and have not yet ceded control to G2, their children. Two of the G2 who help operate the business are in their late 50s/early 60s, with their sibling working outside of the family enterprise. G3 are in their 30s and 40s, with some working in the family business and others working in the single-family office. G4 are babies and toddlers.
Because the T family’s primary and day-to-day focus is on operating the business, they originally had an embedded family office. EFOs exist within a family’s operating business when some of its employees, usually found in accounting or finance, share the dual role of serving both the business and the family. Over the years, the T family’s EFO naturally evolved to be more complex; and some of the people and all of the services were extracted out of the EFO and moved into a newly formed single-family office (SFO), which was managed by some of the G2 and some of the G3.
Matriarch and patriarch have been increasingly relinquishing the reins of the business and SFO to G3, often bypassing G2 through the day-to-day work and direct training and mentorship. As an example, G3 drives and leads the fastest-growing segments of the family enterprise and works mano-a-mano with the grandparents. By contrast, G2 operates the less sexy, slower-growth, “bread and butter” segment and does not get as much support and attention from the G1 parents. Additionally, there is an overarching feeling from G1 that G3 has more energy and hustle than the G2 parents. This has caused significant tension between G1 and G2, as well as the beginnings of resentment of G2 toward the G3 children.
“If you watch ‘Succession,’ you know that sometimes the patriarch will have his kids compete — kind of like General Motors, where they kept the company strong by having the divisions compete against one another,” Fisher said. “Rather than seeing the outsiders as competitors, they see the insiders as competitors.”
Fisher’s advice to the next gen: “Be able to read the weather in your own family and in the company and figure out what you need to do to either position yourself to be happy or not or whom you can trust. Your parents or grandparents are no different than any other senior executives you might work for.”
Recognizing the pressures associated with the next-gen sandwich and significant wealth, combined with the opportunity to do good in the world via philanthropic endeavors, the T family recently engaged an outside adviser to help establish a continuity plan, with proper governance that allowed the family to navigate its dynamics, improve communication and build the fractured trust.
The good news is that the T family is exploring and designing roles and responsibilities in the SFO, businesses and family system. They are working toward rebuilding their fractured relationships and are once again enjoying their personal time together. All four generations are committed to preserving durable family harmony and are willing to do the work out of love for each other and generations to follow.
Considerations
For families in the next-gen sandwich, the main goals are to ensure that the systems and each generation have trust, alignment, communication and control. Spend thoughtful time designing and implementing governance, with a cadence to review and update it based upon the realities of the family.
Appreciate the complex family office relationships
Define your family. Discuss, write and review it regularly. Your definition of family may be based on blood, shared beliefs, culture, religious norms, generations, participation of time, contribution of capital or restricted-to-specific assets (i.e., who can use the beach house). There is no right or wrong.
Hold regular meetings. As a check-in activity, regular family meetings set the tone for public validation, collective support and celebration.
Schedule the talks. Communication skills can be developed, in small groups and at the family level. Team with advisers to manage the process and accelerate essential conversations.
Share legacy conversations. Openly discuss your values, mission statement, hopes or fears, and aspirations.
Write love letters. As an annual tradition, write love letters across generations and share them with one another. Your family history is dynamic; capture it for yourselves and future generations to understand their family origins.
Measure impact. Create meeting summaries and reports to track impact and progress.