Legacy family properties can be a powerful grounding force. It's rare these days to have one place that remains constant throughout our lives. Many people move away for school, then to an apartment, and then to a larger house with the arrival of children. The average U.S. citizen moves more than 11 times in their lives.¹ Americans tend to move more than residents from other countries, but the fact remains that most of us move multiple times throughout life.

Having a home to which you can return through all those transitions provides a sense of place, a connection that remains unchanged amid all the other changes in life.

Such a place can be a huge gift. As someone with a shared family property that has been in my family for eight generations, I know firsthand that sense of belonging to a place and to the people who share it with me.

And yet, as anyone who has ever shared a property with other family members can attest, it takes work. There can be conflict that, if unresolved, can fester and upset family relationships. For this reason, many advisors recommend selling family properties instead of passing them on to your descendants and hoping they can figure out how to make it work.

Perhaps selling is the right thing to do for your family. But before you make that decision, it's worth considering what makes the most sense. This really needs to be a group discussion that includes everyone who will be responsible for the successful transition and ongoing decisions. Keeping a legacy family property while also keeping the family together requires clear communication, thoughtful planning, structure, and commitment. And it takes funding.

This conversation will take time. Depending on geographic and personal constraints, it could take several months or even several years to reach a decision and create a plan.

It is useful to think of the process as three different steps or phases. Each of the steps can result in a decision to sell, or it can progress to the end with a specific plan for transitioning ownership, according to decisions made along the way.

• Step 1. Owner discussion—Hold the property or transition out
• Step 2. Family discussion—Interest and willingness
• Step 3. Family discussion—Creating a working plan

Things to Consider throughout the Process

Don't force the discussion. Being patient can be very challenging, and it's not always possible. Sometimes a death in the family or terminal illness creates a sense of urgency that is unavoidable. But ideally this conversation should begin well before any decisions are required. You can move the process forward by creating agendas for meetings and clarifying next steps. Consider using a professional facilitator for larger families or more complex properties so that everyone can participate fully.

Be open. You may have a vision that you're really excited about, but if it's not shared by others, it will not be successful. The more flexible you are about the outcome, the more likely it is that everyone will feel good about the process and support the eventual decision.

Don't feel you have to go it alone. Families often find that hiring an outside facilitator is helpful. It can make the process feel a bit more formal at times, but it is generally more efficient and allows everyone to participate rather than letting family dynamics interfere with the discussion.

Observe behaviors. Conversations about emotionally charged topics such as money and cherished family properties can be very revealing. Use the discussion with your family to anticipate how well they will work together on the property.

Talk about the things that might go wrong. Things will go wrong, whether it's from a natural disaster, mechanical failure, or accident. Some of these are easy to discuss. Others may be more difficult. You won't be able to anticipate everything, but the more you are able to talk through, the easier it will be to think in practical terms about what you will do.

Document the vision. It's useful to document why you are choosing to work with your family members to preserve the property. This does not need to be a lengthy document. In fact, it can even be a short paragraph. It simply needs to state why the property is important to you as a family. You might start this with your personal vision and have your family add their vision, so the result is collaborative. This statement can be a reference point for decisions and to resolve conflict.

Tricky Issues

The following is a list of common things that can cause conflict over time with legacy family properties. Talk through them during Step 3 and think of any others that may be more specific to your family or to the property itself.

Communication. Strong communication is an essential ingredient in keeping the property in the family. Create a process that supports consistent communication. Family members should meet at least once a year to discuss financial details, make decisions, discuss usage, and address any challenges. I suggest you meet once a year in person and, in addition, have quarterly conference calls. The quarterly discussions enable you to address any issues that came up in the previous season and address topics about future needs. It is essential to create a process for raising and resolving disagreement because conflict is inevitable in group ownership.

Financial burden. It is easy to enjoy a place that someone else is funding or has endowed. When there is no mortgage on the property, and there's a funding plan to support whatever is needed in the way of capital expenses, real estate taxes, and property management, there is one less major source of conflict. But these situations are extremely rare. Typically, there are at least annual expenses that need to be covered. There are too many options for a complete discussion on the different ownership structures and the implications for each. These details also vary by state and country. Find good advisors who specialize in these matters to help you understand what type of ownership structure and financial model makes sense for both your property and your family. Make sure the model is sustainable for whatever time horizon you think is reasonable for your family's ownership. Consider how to make it affordable for everyone.

Financial disparity. Sooner or later this will be an issue for family members if the property remains in the family for a long time. It first appears in discussions about upkeep or the question of whether it's time to renovate the kitchen. Then it creeps into conversations about annual fees or dues. Think about how you will handle these issues. In general, families that find ways to successfully accommodate financial disparity are also able to sustain their collective ownership longer than families that have more rigid “pay-to-play” rules. The most straightforward way to do this is by establishing an endowment or using an earned revenue stream, such as rental income, which can be set aside for current or future use. Some families also find it useful to create a process for buying out family members who no longer wish to participate. Others focus more on creating a process to ensure that the property is available to all family members, regardless of their ability to pay.

Usage disparity. The more users there are, the faster this will become an issue. Some family members may live within driving distance to the property while others may require lengthy travel. Those who live close-by are more likely to be frequent visitors while those who live further afield may visit fewer times during the year and for longer stretches of time. It's important to be aware of these differences, discuss them, and find ways to accommodate them. Creating a scheduling, reservation, and time-allocation process can be a useful way of ensuring everyone understands and follows the process.

Ownership perception. This issue can be closely tied to usage disparity. Ownership perception is different than actual ownership. It describes the perceived difference in ownership among family members. In general, the objective is to prevent differences in ownership perception within the family. It's not easy because more frequent users often participate more in property management and maintenance needs. For example, imagine you cut, split, and stack the three cords of wood needed for the fireplace each winter while other family members use their time on the property to relax and enjoy the view. Over time, recurring patterns like this can translate into some family members feeling like their hard work should give them more say when decisions need to be made. Those who spend just one week on the property may begin to sense over time that their vote doesn't count as much on decisions because they aren't as active in ongoing management details. All these challenges can be addressed and mitigated, but they need to be discussed and aired.

Management burden. The size and scope of the property will dictate how much time it takes to manage and steward it. If a lot of hands-on work is required, consider including property management fees or other staffing costs into the annual expenses. Sometimes family members decide to rotate the management responsibilities, so every member shares the burden over time. If that's not practical, be clear about what makes the most sense and discuss whether the “manager's” time commitment should be recognized in some way, whether in a reduction of annual fees or some other gesture. If you decide to create exceptions, be mindful of how it might impact everyone's ownership perception.

House rules. House cleaning, food stocking, storage space, and even parenting styles can all come into play here. It is no fun to arrive to a house that isn't clean or has no food in the pantry when you left it fully stocked on your last visit. Establishing clear expectations for these details can go a long way toward family harmony. If there are discrepancies between family members about what it means to leave the house “clean,” create a checklist and guidelines. That way, when there is conflict, you can have a specific conversation about how to address it.

Legacy family properties can build long-standing family connections, provide a lifetime of memories and create continuity through generations that establishes a unique sense of belonging and identity. When families are intentional with how they make it work, it can be magical. It's worth taking the time. That will make all the difference.

Additional Resources

1. James Hughes, Family: The Compact Among Generations (New York: Bloomberg Press, 2007).
2. James Hughes, Susan Massenzio, and Keith Whitaker, Complete Family Wealth (New York: Bloomberg Press, 2018).
3. Charles W. Collier, Wealth in Families, 3rd ed. (Cambridge, MA: Harvard University, 2012).
4. Roy Williams and Vic Preisser, Preparing Heirs (Bandon, OR: Robert D. Reed Publishers, 2011).
5. George Howe Colt, The Big House (New York: Simon & Schuster, 2004).

Biography

Jamie Forbes grew up in an old New England family imbued with a strong sense of belonging, good fortune, and a clear understanding that with privilege comes responsibility. This experience taught him the importance of family culture, tradition, mentoring, and stewardship.

As founder of Forbes Legacy Advisors, Jamie works with individuals and families on all aspects of family culture. He believes that sustaining a healthy family culture is an essential element of creating resilient families. Jamie advises clients in the areas of family culture, governance, and philanthropy.

When he is not at work, Jamie can be found with his wife and two daughters or enjoying time with friends. Jamie is a Charter Advisor of Philanthropy (CAP), holds a BA in economics from Connecticut College, and has also studied at the Wharton School and Babson College.