Maybe his words struck me because I have three daughters myself.

A 65-year-old father of two sons and two daughters was explaining his will to me. The $3 million family trucking business was going to "the boys," and his daughters would receive a grand total of $100,000. That’s right, $50,000 apiece.

"Well the boys have helped me in the business," he said. "And the girls have married pretty well. If I treat all four kids equally, my boys won’t be able to make payments to the bank and to their sisters. We’re already up to our eyeballs in debt."

I asked him if he had discussed his plan with his children. "No," he said. "I know if I tell the girls they’ll be upset, and I don’t want the boys to think they’ll be rich some day—it might take away their motivation. They’ll all find out in due time." I wondered how old his kids would need to be before "due time" arrived. The oldest children were already in their early 40’s.

His wife silently served us coffee. This issue had obviously been discussed before, and he wasn’t searching for input.

What a recipe for disaster! Consider the following:

• The sons are ignorant about their future in the business. For all they know their parents’ estate is going to be divided in four equal shares. In that case, are they building up a business they’ll need to buy later from their sisters? Is a simple "just trust me" from Dad enough? Do you think the sons’ wives are happy with their uncertain future?
• While the daughters are floating along, glad that the family business is doing well, their big disappointment is still coming. Imagine the churning emotion they’ll feel some day. Their parents die, their brothers walk away with a $3 million business, and they take home $50,000. Obviously there is much more to a parent/child relationship than money, but what questions would go through your mind? Did Mom and Dad feel different about us than they did about our brothers?

It is easy to talk about tax law since it is a science. Family harmony, on the other hand, is a very personal art.

Most of my clients would agree that family harmony is more important than the things they own. How can family harmony be maintained? And, is equal the same as fair?

Here is your assignment before proceeding to Part II. Imagine yourself in the place of each of your children. How does what they are getting, compare with what they are expecting?

How does what your children are inheriting, compare with what they are expecting?

You know how kids can be. Sometimes they are more concerned about what their brother or sister receives than what they receive themselves. So regardless of family and business circumstances, you can figure that your off-dairy children are expecting very equal treatment. Since our flawed human nature is difficult to shrug, perhaps you should remember this principle when planning your estate. Who wants to leave a legacy of feuding children?

You have some kids in the business who are contributing to the dairy’s success, and other kids pursuing their own ventures. You love them all the same, but they are in different situations. Your on-dairy heirs’ future depends on how you treat them in your estate plan, whereas the off-dairy heirs view their potential inheritance as a simple bump up on their balance sheet. What should you do?

• Giving children grossly unequal shares of the estate. While many parents insist that their kids get along just great, things change when parents die and property is going to be distributed.
• Punishing financially successful children by decreasing their inheritance. Many children are driven to success simply to please their parents. Decreasing the inherited share of a successful child is a crushing blow to the over-achiever.
• Forcing children to own property together after your death.
• Requiring the off-dairy heir to leave their inheritance in the business as a long-term loan to the on-dairy heir. Children don’t do well in debtor/creditor relationships.
• Failing to communicate your plan to your children. Some of the best experiences I’ve had have come at family meetings where I explained the parents’ plan to all the children. This is especially important when children are treated differently to arrive at what we believe to be a fair and equitable resolution. It is best to avoid surprises. Take the opportunity to explain your logic to your children.
• Planning late. A study sponsored by National Life of Vermont examined 749 family businesses that failed within four years of being transferred to the second generation. It found that over 97% of the inheritors blamed founders for being negligent in preparing for the transition, or for having an inadequate estate plan. Some methods of equalizing inheritance to your children take many years to accomplish. Postponing your planning will reduce your options.

Perhaps the greatest pitfall of all is neglecting to recognize the input of the child(ren) who is active in the business. According to a study done by Prince & Associates, the vast majority of family business founders have no faith in their kids’ ability to run their businesses. But for a smooth transition to occur, children simply must be given the opportunity to "try out their wings."

So, what are some creative ways of rewarding the efforts of on-dairy children, and still arrive at an estate distribution plan that is equitable to all?

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