The seventh of twelve most common mistakes agribusiness owners repeat:

The single biggest question I hear in my client consultations, columns, and live presentations concerns ‘equal versus fair’ for actively farming kids and their non-farming (non-active) siblings.

It’s asked in various ways - sometimes it’s framed as a simple comment like, “We don’t want to leave anyone out.”  Other instances are more forthright: “How do we make sure Joan is recognized for her work on the farm, but also give something to our son Frank, in Columbus?”

As a parent, your emotional tendency may be to state unequivocally that you want to treat all of your children fairly.  You may wish to divide ownership evenly, but doing so may have disastrous results.  You will trigger a family conflict that could potentially affect everything you hold dear.

You may think, “If I divide everything equally, isn’t that fair?”  In fact, just the opposite is true. 

__________ (Continued from Leave a Legacy on AgWeb) __________

Shared ownership requires active children to discuss management decisions with their passive (non-active) siblings. Passive children feel they have a right to protect their interests in the family farm by participating in management decisions, and their objective is usually the polar opposite of active children.

Sometimes our professional conviction is tested.  We’re often told in no uncertain terms that each child is “entitled to a fair share.”  While it forces us to explain the rationale between equal and fair, it also allows us to reexamine and recommit to the concept.

Not Fair:  Equally dividing the ownership interest in an operation among active and inactive children.

Fair:  Recognizing the difference active children make in the long term success of the operation. 

Not Fair:  Hobbling the active owners with inactive co-owner/management.

Fair: Equitably distributing other assets to inactive/non-farming children.

Not Fair: Leaving undivided interests to all children jeopardizes the success of the operation, the security of active farming children and fails to recognize contributions.

Fair: Avoiding the ‘wedge of discontent’, and equitably distributing other assets to non-farming children, while recognizing the contributions of farming children.

Not Fair: Not openly communicating succession intentions with active and involved family members.

Fair: Open and honest communication which creates a bridge of trust, atmosphere of integrity and feelings of security.

Ownership divided equally among all the children is not fair to anyone.  Active and passive children have opposing goals for their business interests and investment assets.