Monday 26 October 2009

How can we be fair to all our children?

How can I be fair to all my children? This is a question I often get asked by parents who are sorting out their Wills or starting to transfer assets to the next generation.

My answer is always you don't have to be equitable to be fair.

It is often unrealistic to be equitable anyway if there is a business or farm involved. The farm could be worth millions, however that is only on paper and often bears no resemblance to it's earning capacity. My experience in running family meetings has taught me that as long as people feel they have been consulted and know exactly what is happening they behave very reasonably.

The next question is - what if the child who has the farm or business sells it and makes a lot of money? To prevent this being unfair a sunset clause can be put on the asset so that if they do sell they have to share the profits with siblings. You can put whatever time frame on this you wish and it can incorporate a sliding scale with siblings getting less of a share if the asset is sold some years after it was inherited. You also have to be careful that any increase in the asset value due to the owner's work is separated and the owner retains that increase.

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