Why Estate Planning Is Essential To Minimising Family Strife

When business-owning parents leave their children equal shares in the operation, a battle can erupt between those who work for the company and those who don’t. There are better ways to fairly distribute wealth to heirs, writes Trevor Dickinson.

- Trevor Dickinson

Almost all parents, in their estate planning, say they want their assets to be divided equally among their children. This concept seems so obviously fair that it’s rarely challenged.

But is it really fair to give siblings equal shares in the family farm when one has worked hard for 20 years building the agribusiness while the others have had nothing to do with it?

Most people would agree that this is probably not fair. When parents think about their estate, they rapidly retreat to equality because this at least has the appearance of being fair. It might also seem like a simpler approach than creating a meaningful division of assets. However, there are many ways of fairly dispensing family wealth that don’t depend on the straightforward, ‘equal’ treatment of one’s heirs. When children are given equal shares in the family farm, a battle often ensues. In some cases, those who participate in the agribusiness end up with more in value than those who don’t. Where siblings are joint shareholders in a business, the dividend flow is controlled by those siblings in the management of the company. Those who don’t work for the family business often do not receive a fair share of the financial benefits.