Most parents take pride in treating their kids equally, yet when it comes to succession of a family agribusiness, that may not be the best path.

If all of your children are passive (not actively involved in the business), it may indeed be possible to equally divide ownership. With the kids as shareholders to a corporation, operational responsibilities would be handled by a third-party manager.

If, however, some of the children are active in the business and others are passive, consider how transferring ownership shares to passive children may adversely affect the family and the business:

• Even under the best of circumstances, passive children may complicate the decision-making process of the business.
• Passive children hold a non-liquid asset, which provides no forseeable benefit to the lifestyle of their own households.
• Active children have made personal contributions of sweat equity, have foregone more lucrative opportunities elsewhere, and have made do with minimal income when necessary.
• Factor in spouses and grandchildren (both active and passive), and things can really get sticky.

In a comprehensive succession plan, the goal should be equitable rather than equal transfers. With an equitable transfer, each child is given a share of the family wealth in a form that is appropriate to that individual.

Think multidimensional. By considering the health and strength of the family business, you will also help to reduce conflict among family members.