Last issue I wrote about the difference between “equal” and “fair” and shared a current case situation (Family Business Minute – July 2011). A number of colleagues inquired about what guides me in determining what’s fair; here are my thoughts on this interesting question.
In a nutshell, I use my knowledge of and insight into the family to help them discover their own fair. The tricky part is getting the Matriarch/Patriarch/Parents/Grandparents to open up a discussion within the family about all the feelings and factors. Historically, these decisions were made by patriarchs (yes, men specifically, although this is changing). They would sit with their attorney and “paper up” the will and nobody in the family knew much, if anything, about how things would be handled until the Patriarch died.
Today, enterprising families are becoming much more sophisticated about the emotions and family dynamics related to these transitions of wealth and control, and try to ensure that conflict among heirs will be minimal. Parents want to pass on what they have built without unintentionally, or intentionally, creating friction among the heirs that might create or worsen family relationships. My goal is to facilitate a safe environment for the family to open up discussion – not a debate over who gets what, but a discussion that begins with little reference to money or material wealth. In these initial discussions the emphasis is on discussing the family history, stories, and relationships and dreams. It is essential for the family members to express their values in this process, and there are a number of creative ways I accomplish this.
The main idea is to open communication and express family values FIRST and then deal with the nuts and bolts of who gets what and how and when they get it. I do not advocate family leaders give up their discretion and decision-making power but, rather, find out what in life is meaningful for all involved. Without these discussions there is risk of giving your vegetarian son the organic farmer the meat packing plant when your carnivorous daughter with an MBA and extensive experience in food production might be much more satisfied (and feel more understood and loved) by receiving the same gift. Equally important, the MBA daughter might be far better equipped to manage and sustain the business and carry on the founder’s vision.
What is the Lesson?
Enterprising Families: Though it is possible for you to “reach beyond the grave” and impose your deep desires on your heirs, even when they run counter to what those heirs might want, think carefully about how doing so might affect their reactions to the legacy you have created.
Advisors to Enterprising Families: Recognize that you have allegiance to the business founders/owners to help them clarify their intentions and dreams, and put them into action in terms of how their business and estate will pass on to the next generations. Also, gently help them be mindful of the unintended consequences for family dynamics if an estate plan ends up creating or worsening family tensions. This is an ongoing process and not a one-time discussion.