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Family Business Matters       05/15 10:26

   Fairness: An Elusive Goal

   If you own land, livestock and equipment, the question of how to be fair 
when transitioning assets to the next generation is one of the most difficult 
subjects you face.

By Lance Woodbury
DTN Farm Business Adviser

   If you own land, livestock and equipment, the question of how to be fair 
when transitioning assets to the next generation is one of the most difficult 
subjects you face. While some business owners sell assets to the next 
generation, many in our capital-intensive agriculture industry view inheritance 
and gifting strategies as the primary transition vehicles. 

   An inherent desire by most parents to treat children equally does not easily 
lend itself to assets that are tied to business operations, particularly if 
everyone did not return to the business. Or, when various parcels of land or 
special collections of assets (like antiques or guns), which may not be easily 
liquidated, have different levels of emotional attachment. Or, when your 
children have different needs based on their own family and financial 
situations. The "right answer" when it comes to dividing your estate can feel 
awfully elusive. Consider, then, these three ideas to gain clarity on your 
transition.

   ALIGN WITH YOUR SPOUSE

   The first suggestion is to talk at length with your spouse about the 
different ideas and beliefs you have about the transition of your assets. What 
does a successful transition look like from each of your perspectives? I've 
seen families fall into chaos and indecision because the parents did not have a 
common vision and unified communication. Before a decision is made, talk 
through your goals with your husband or wife, and a confidential friend or 
adviser to clearly articulate your objectives. Demonstrating clarity and 
agreement to the next generation is important for its eventual support and 
implementation of your wishes.

   CONSIDER EACH CHILD'S "BLESSING" 

   In the Bible, Jacob blesses each of his sons differently (Genesis 49). I 
find this passage instructive because it teaches that each son deserves 
something unique (and in this case, not always something positive) because of 
things they have done. They have demonstrated responsibility or strength, 
foolishness or anger, and those behaviors are taken into account. 

   It may be that some of your children will be better stewards of assets like 
land. Other children may be better off with cash. Some children may have 
immediate financial needs, while others may have no financial needs and could 
be blessed with less liquid or even generation-skipping gifts. I've seen a 
number of families approach their estate plan with some portion to be divided 
equally, and other assets to be divided according to the unique position or 
interests of each child. You have an opportunity to uniquely tailor your estate.

   YOU DON'T CONTROL THEIR REACTION

   Parents often fear they will upset their children with their estate plan, 
and many desire some level of input from the next generation. If the estate 
plan involves an ongoing business in which adult children are involved, I 
suggest the parents make their intentions known. But, the estate determination 
rests with the parents, and they should make the decision they feel best 
reflects their goals. If a goal is to please every child, the likelihood of 
disappointment is high. But, if the goal is to arrive at what the parents 
believe to be fair (regardless of whether dollar values are equal), success is 
highly probable. The point is that your children's reaction is out of your 
hands. Hopefully, they will choose to approach their inheritance wisely and 
with respect.

   Estate planning is one of the most heart-wrenching activities you may go 
through in later years. But, by being on the same page with your spouse, 
thinking about each child's situation and focusing on your choices instead of 
your children's reactions, you will be well on your way to a successful estate 
plan.

   **

   Write Lance Woodbury at Family Business Matters, 2204 Lakeshore Dr., Suite 
415, Birmingham, AL 35209, or email lance@agprogress.com. 


(AG)

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