Everybody knows that some conversations are really hard to start. Reading through articles and surveys on the hardest conversations people encounter there are three topics consistently at the top:
2) Work (compensation, promotion, performance)
3) Relationships (family, romantic)
When it comes to a family business, all three are on the table, big time! They can be so intrinsically tied together; a child who is working in a family business may feel frustrated by the pay ceiling they are encountering, but starting that conversation with dad and mom is incredibly daunting. A parent may be observing routine inadequate performance from a child working for them, but they keep their mouth shut rather than rock the boat.
Even when you are talking to family (or perhaps especially when you are talking to family) figuring out where to start and how to express yourself can be a difficult proposition. When it comes to family businesses there is a strong tendency to avoid hard conversations until they are truly unavoidable, which can sometimes also mean truly too late.
If you add to the topics of money, work, and relationships the elements of inheritance and "fairness" the conversation can get really gnarly. How do the parents intend to cut up the pie.
In our family, my wife and I consistently try to make sure our kids know that they do not always get exactly the same thing as their siblings. In fact we say "life's not fair" often enough it could probably be called our family motto. When faced with a child begging for two cookies since that was what their brother got, we will repeat the motto and start singing this classic by The Rolling Stones:
We do this so our kids will grow up understanding that they do not always get their way, the world is not fair and demanding that it should be will not get you anywhere. But at the end of the day this is an extremely simplified practice in our home, we apply it to candy and video games and having friends over, but we generally try to treat all our kids similarly. We want them to all feel loved equally and have the same opportunities to experience and enjoy life. And when it comes to division of our estate, we have our Will drawn up with a simple split to all four kids in equal portions.
Division of farming businesses are often not a simple matter. A significant amount of assets in a family farm can be invested inland that is part of the farming operation, and in equipment used in the farming operation. Also, while there are probably some family farms in which all children join in the business, more often there are some children who are active and some children who choose careers outside of the farm.
The options are tough. Will it be necessary for the "active" child to buy out the shares of the "inactive" children? Would this even be financially possible for them? Has a child worked in the family business for a long time, accumulating "sweat equity" and should they be entitled to a greater portion of an inheritance?
In the interest of preserving family relationship, both between parents and children, and especially between siblings after dad and mom are gone, it is absolutely essential that the tough conversations happen sooner rather than later.
Instead of just hoping that an opportunity to have the hard conversation will present itself, take the initiative to schedule a specific time for it to happen. Make sure that all involved family members are present. Walk through the proposal. Walk through the reasons. Consider the impact of decisions on everybody effected, and give opportunity for every to express their thoughts and feelings. If getting this started seems daunting and you feel that assistance is needed in working through the process, give me a call and I can help in getting everybody to the table, and getting the conversation started. You will be glad that you do.