One of the challenges facing the senior generation (generally the parents) for families in business is how to be fair to younger generations (generally the children and their spouses) in distribution of the estate.  Families in business typically own various assets, ranging from highly liquid personal accounts to real estate and family business stock.  The equal division of personal accounts can generally be accomplished without dissension in the family.  However, even an equal distribution can be viewed as unfair if one of the younger generation members has been exclusively responsible for the day to day care of the senior generation.  Real estate can be sold and divided equally but the fairness issue may arise if one of the younger generation is currently making use of the real estate.

The division of family business stock creates other challenges that require additional planning.  I want to address the challenge to senior generations to deal fairly with younger generations.  Let's start with an undeniable truth:  An equal division of family business stock can be viewed as unfair.  This seems counter-intuitive.  However, it is likely that not all of the younger generation works in the family business.  An equal division of family business stock imposes a process on the younger generation that may or may not work.

First, the parents want their children to know they are loved equally.  This desire can translate into a mistaken view that the family business stock must be divided equally.  This view differs from the way the family has operated in the past.  For example, parents want to be fair even though they can never raise their children equally.  Expenses such as gifts, education, health and clothing are never equal among the children.  These expenses are never equal even between the parents.  Specific needs are taken into account to determine what will be spent.  (Read more from Grant Goodvin and add comments.)

We work with our clients to help them with change, with whatever the change may be. It could be succession, it could be wealth planning, it could be cultivating leadership -- whatever it is, it is change. When change is introduced, regardless of what that modification may be, emotions are heightened. The intensity can skew positive (excitement) or negative (dread), but either way, the automatic tendency for people in such situations is to become reactive to other family members and to other situations in a way they might not when they are not under stress. When stress levels go up, as they do with any transition (with highly productive as well as highly stressful periods) the need to practice self-awareness is all important. As advisors, we need to help the people we work with, as well as our selves, to get back to our own center: as an advisor, there is as much need to help settle family members in the system as there is with helping to go through whatever change you were hired to help with in the first place.

I was recently reminded of how easily we can become reactive. My husband and I took a trip to England and Wales. It was a delightful trip. As we were driving on the left side of the road, with a right-handed steering wheel, on a two-lane roadway, I became what I would describe as reactive (my husband might choose different words). I was anxious for most of the drive. My husband had been doing quite well with the driving situation, actually, but I couldn't settle myself down enough to enjoy the scenery. In fact, every time we came to a roundabout where we needed to "give way" to the driver on the right, I would tense up.  (Read more from Deb Houden and add comments.)