The Myth of Equality

Edwin Friesen

Like most people planning their estates, I am committed to an equal distribution to our children – equal in that they would each receive the same dollar amount or assets of similar value. After all, we love our children equally so they should receive equally. That is the ideal of most parents but that is hardly ever possible or practical. Here is why.

Unless you have only one child or only a set of twins or triplets, the different ages at which the children receive their inheritance is a factor. The oldest child may get their inheritance at age 65 and the youngest at age 50. In theory that gives the younger one 15 more years to invest the funds. The heirs may have received the same dollar amount but not the same benefit potential. The older child has less time to invest and enjoy the inheritance. The greater the age differences between the oldest and the youngest, the greater the disparity. Is that equal?

One or several of the children may have continued working on the family farm/business, becoming shareholders, maybe even the principle owner(s) while their siblings pursued other careers. Years later, if the farm or business has done well, the non-farm/business siblings may feel they deserve to enjoy some of the farm/business success. After all, shouldn’t all of the children benefit equally from the farm or business started by their parents? And what if they want to buy into the family farm/business at that time, do the original siblings have an obligation to them? Are the siblings who took the risk over the years now obligated to share the reward?

Let’s try the shoe on the other foot. Suppose that in spite of hard work and good management the family farm/business failed. Are the non-farming/business family members expected to share in the loss? What if one of the non-farming/business children strikes it rich with their investments? Is that wealth personal or is it shared with the rest of the family? Does sharing apply only when assets increase?

If you are the parent and you find yourself looking for easy answers to these succession questions, you may be disappointed. However here are some rules of thumb that you may find helpful.

1. "Trust the Lord with all your heart; do not depend on your own understanding. Seek his will in all you do, and he will direct your paths.” Prov 3:5-6. Asking God for wisdom seems self-evident, but we need to be reminded.
2. Learn from others who have gone (or are going) through similar situations.
3. Seek help from professional advisors in succession planning.
4. Dialogue openly about your estate plans and include the non-farming/business family members as appropriate.
5. Assure everyone that you love them equally and that your goal is equality as far as reasonably possible given your unique family circumstances.
6. Life is a series of opportunities and challenges. Potential heirs must realize that no one can turn back the clock to redo life. We have to live with the choices we made along life’s way. We need to accept the present and then plan for the future.

First published in 2007.