First Person: Money & Meaning
Patrimony and Partnership
Elizabeth Giffin Flint
11/01/2005

Elizabeth Giffin Flint is a third-generation Californian and a member
of an extended family that stretches from Los Angeles to Steinbeck country in the Salinas Valley and beyond. This family, like many with legacies of property left by earlier generations, struggles to strike the right balance between sentimental attachment to family heritage and prudent management of valuable assets.

We would like to think of inherited property as easy money. One day, we wake up and are considerably wealthier than we were when we went to sleep the night before. We think we will treat this property as an asset and will make rational business decisions to limit our risk and maximize our investment potential.

THE BUILDING housing the Santa Cruz Market has been in the family for generations, a cause of both pride and headaches.
In reality, however, business decisions involving inherited property are not easily made. The assets our loved ones leave to us often come with an emotional price tag, one that challenges and distorts our careful investment calculations. In my case, this sentimental cost pits financial prudence against family mythology and tradition and, quite frankly, I’m not at all sure which one will, or should, prevail.

I am lucky. I like being a member of my extended family, and I enjoy our family mystique. It started with my grandparents, Bob and Gladys, who both left hardscrabble Midwest childhoods to pursue the California dream. They met in the 1920s while working in an oil field in what is now Long Beach. They married soon after and settled in Goleta, a small town just outside of Santa Barbara.

My grandparents formed an enviable 58-year partnership, the center of which was family—primarily three sons and their wives and children—and their business empire. My grandfather started out as a welder and, through hard work, brains and some luck, eventually owned a business and several investment properties. My grandparents’ prosperity, even during the Great Depression, allowed them to raise their children and provide shelter for their extended family in a classic ranch house at the center of a large citrus orchard. They were fortunate to enjoy California during an idyllic time—before it became saturated with houses, freeways and the inescapable latte-swilling, cell-phone-wielding, SUV-driving masses.

We have always gotten by on good faith and a handshake agreement. To suggest that we need anything more is to challenge my grandpa’s way of doing business.
My grandpa eventually bought the airport hangar that housed the airplane that first flew mail into Santa Barbara. He moved this odd structure to downtown Goleta and turned it into what is now the Santa Cruz Ranch Market. This building has been deemed a historical landmark; there is a nice plaque in the front attesting to that fact. My family does not run the market; we lease the building to another family that has run the market for decades.

Thanks to the lasting impact my grandparents had on this area, in 1999 we were named the Goleta Pioneer Family of the Year. Many of my uncles and cousins have stayed here, proudly following in my grandparents’ entrepreneurial footsteps. Likewise, I started my law career in Santa Barbara hoping to continue in the family tradition. To my delight, complete strangers would recognize my last name and comment favorably about my family.

Unforeseen Costs
My grandparents died 20 years ago and left the market in equal shares to their three sons, one of whom was my father. One son passed away five years ago, and my father died a year later. The market is now owned by my Aunt Mary, Uncle Don and by my three brothers and me. I appreciate that my grandparents were smart enough to buy this property and that my dad was nice enough to leave me a share of it. My job in managing this asset is primarily to serve as the family communication conduit (I telephone everyone when a decision has to be made) and to do some minor lawyering. Other than that, all I do is spend the rent check I receive every month.

With the easy money, of course, comes a downside. Death permeates this investment. My grandparents, then my dad, had to die before I became part owner of this property. I am reminded of this sad fact every time I deal with the market. I liked it better when they were alive, and it was their property.

There also remains the question of our—the current owners’—deaths. My aunt and uncle will probably go first because they are older, but the truth is any one of us can die at any time. What happens then? Will they pass on their one-third share to each of their three children? If they do, the property will have 10 owners. I am newly married, and though my family likes my husband Carl, I am not sure everyone would want to go into business with him if I die unexpectedly and he inherits my share.

To further complicate matters, we do not have a partnership agreement, but instead hold our shares as tenants in common. Consequently, we have no formal mechanism by which we make decisions. So far this has not been a problem because we have been able to talk through the issues that have arisen (such as renewing the lease) and reach agreement on key points. However, it is only a matter of time before something comes up that we cannot agree on, and we will need some way to resolve the issue.

For example, the area in which the market is located has been targeted for redevelopment, and the property may be taken by eminent domain. Eminent domain is a complex process that requires extensive negotiation and possibly litigation. We have also been approached by a local charity to buy the property and by a drug store chain to enter into a long-term lease. At some point, we will need to decide upon a different course than the one we are currently taking. I have no idea how that decision, considering all of the competing interests involved, will be made.

With no partnership agreement limiting us, each of us can do whatever we want with our share of the property, including selling it or using it to secure a loan. This means that the normal life events that occur in all families, such as marriage, divorce, financial hardship and even death, take on new meaning: How will it affect the market? I liked it better when we were just concerned about each other as family members and not business partners.

Changing World
I have tried and failed to convince the family that we need a partnership agreement. The problem is that our family has been doing business without one for decades. Our relationship with the current tenants stretches back a few generations. We have always gotten by on good faith and a handshake agreement, and the rent check has cleared each month. To suggest that we need anything more is to challenge my grandpa’s way of doing business.

I wish the world still operated on a handshake and in good faith. As a lawyer and student of human nature, I know it does not. But, like the rest of my family, I don’t want to press the issue for now—financial prudence will just have to wait. We are not a close family in the sense that we see or talk to each other regularly. But when my uncle died, we went over to spend time with his family; they did the same for us when my dad died. We still get together a few times a year to eat tri-tip, drink wine, tell stories and have a good laugh. It’s not the same as when my grandparents headed the family, but it is all we have left. I’ll take it for now and hope that the rest works itself out.