Fair Versus Equal
What do Parents Owe Their Children?
By: Jill Falloon, PHEc, Home Economics Section
915 - 401 York Avenue, Winnipeg MB R3C OP8
Should the assets of the farm be equally divided among the farmer's heirs? Do the family members who are not farming have the same rights and privileges as the family members who are farming? Is it fair to treat siblings equally regardless of their contributions to the family business? Should the parents give a substantial portion of their estate to charity or should they give it to the kids? Is it justified to borrow against the business in order to treat siblings equally? These are just a few of the questions parents have to ask themselves when they are thinking about their retirement, passing the farm to the next generation, and planning their estate.
Unfortunately there are no right answers when it comes to the question, what do you owe your children? However, here are a few points that may help you with this personal struggle. Ultimately the answer to this question is between you and your spouse.
Understanding Family Tensions
Succession planning, i.e. transferring the farm to the next generation, in families with more than one child is a delicate task that often times breeds conflict.
Many families make the mistake, for instance, of assuming that all members share the same values. In fact, siblings may have very different values. Birth order can play a big impact. A first-born might be raised by hard-pressed parents who are working night and day. By the time the fourth offspring reaches adulthood, the same parents may be well off and easing into retirement. So even though siblings have grown up in the same family, they may approach life as if they had been raised by different parents.
Rivalry among siblings often intensifies in the family business. While it can motivate siblings to have excellent job performances, competition also can get out of control, sparking battles that hurt the business. Certainly different personalities of children also play a big role in determining how well they get along and how much sibling rivalry occurs.
Whether they like it or not, siblings in business also find themselves harnessed with their brothers and sisters in the most fragile of business relationships -- the partnership. The Masters of Business Administration Dictionary defines partnership as "a merchant vessel prone to collision with other vessels, especially friendships." If partnerships tend to sink friendships, imagine their impact on sibling relationships!
Children's spouses introduce another source of conflict. Spouses often don't know the family business well. Even if they were raised on a farm it is often times different because when their role changes so does their expectations. When their husbands or wives come into the house each night, they typically hear only about the problems, not the joys. Also, spouses may grow jealous over seeming inequities in family members' pay and perks. As a result, even innocent in-laws may over time tend to pull the family apart.
One other opportunity for conflict arises when the goals of the retiring couple clash with the goals of the young couple who are taking over the farm. The younger generation, in general, wants to take on more risk than the older generation. Whatever the issue, you are not alone; thousands of other farm families experience this strife.
Types of Justice
When conflicts in family farm businesses fall within the realm of what is fair and just, they usually take on a level of intensity that makes them difficult to resolve. Perhaps it is because the children see this as the last opportunity the parents have to make things right. Perhaps it is because the parents are aware of the finality of it. Whatever the reason, the act of passing on the family legacy packs quite a wallop! Issues of justice tend to be messy and complicated. While it is true that justice is...