Many families when considering the sale of a business or holdings will work with their attorneys, accountants and financial advisors to perform pre-transaction planning. They’ll start by considering the tax implications, and even before negotiating the deal, they’ll consider whether they are open to investing in another enterprise or property, put the proceeds into a trust, or whether or how to donate to philanthropic causes.

But what about family expectations? If it’s a closely held family business, owned and created by the patriarch, matriarch or family elders, what expectations may the adult children, their spouses, and their offspring have on potential distributions?

As the elder, you have to make clear, early on, where you intend to steer, invest or distribute the proceeds, especially if it doesn’t include your progeny in the near-term – or ever.

Well before any transaction is executed, you can help set the stage for where, whether or how the family leaders plan to distribute the proceeds, and I suggest you start the discussions concurrently with when you start the pre-transaction planning process. This can be acutely important, especially if you don’t know whether your plans will run counter to the next generation’s or other family members’ own expectations.

In many countries, “forced heirship rules” guide where proceeds go in the event of the death. The United States has no such rules. Inheritance is a privilege under the control of the elders, not an entitlement of the progeny.

A client was explaining about their father’s decisions regarding proceeds from a multi-billion-dollar sale of his business. My client was perturbed that their father was pressuring the family members to put their distributions from the sale into a family limited partnership and a shared donor advised fund.

Keep in mind that any wealth transferred before death is a privilege not a right. The heir – in their 50s – felt they were being controlled by their father, who from their perspective was being unreasonable. We had discussions around the impact on them and their family unit, spouse and children.

Using a “nuclear option” would have likely left my client in poor tidings with their father, and very possibly would have destroyed the family.

This all happened because the father had performed no pre-transaction family planning. Had the father sat down and explained his plans and thinking to the family – “Let’s go into philanthropy together, and this won’t impact what you will receive down the road” – the child may not have agreed. But the situation might have been far less acrimonious and not come to a head, as opposed to the child learning of their father’s plans after the sale of the business.

I’ve written about family planning and relationships in the past – such as putting family or business first (here), how out clauses can avoid family feuds (here), and why sometimes family leaders must cut off difficult heirs (here).

Pre-transaction family planning is a critical component of family governance; ideally, elders will tell the heirs and offspring well in advance how they plan to handle family finances or proceeds from any sale. If you have no family governance in place or hold no regular family meetings, have these conversations early to help set expectations and pre-empt any issues before they happen.

Regardless of whether the progeny is mistaken as to their “right” to inheritance or a portion of family wealth, it’s important to consider pre-transaction family planning well before any transaction gets underway. If you wait until late in a transaction, it may be too late to set those expectations – and prevent any hard feelings.

If your family is facing potential acrimony stemming from the sale of a family business or holdings, and you believe counsel could help set those expectations or assuage any hard feelings, let’s talk. I cannot guarantee the parties will agree on the outcome, but making intentions clear can help set the stage for future actions.