Your children are all equal, right?
But what does that mean in practice?
Consider some real-world examples:
You want to pay for your children’s university education. One does an arts degree, while another starts with a psychology degree, then does a master’s and now wants to do a PhD. How much do they each get for this?
You want to help each of your children buy a house – their primary residence. If things were ‘equal’, you might gift them each the same amount of money for this purpose.
But what if they live in different places with very different cost of housing? How many large homes with gardens can you buy in a nice suburb of Dallas for the same price as an apartment in central Paris?
What if they both live in the same suburb, but there is ten years age difference between them? What a house cost ten years ago would not get very much today!
Time is a very important ‘unequaliser’. One patriarch discussed with me the annual income supplement he gives his four children. From age 25, they each get a set amount each year. But there are eight years between eldest and youngest. I asked him if he indexes the amount for inflation. Now he does.
But even then, is it really equal?
What if the kids have different needs when it comes to housing? This is a great segue into a discussion about generation skipping. If your three children have zero, five, and two children respectively, do you split things ‘equally’ between them?
What if a family member has a medical condition? The family pays their expenses, but should other family members be financially equalised? It sounds absurd, but … (little surprises me anymore).
What if there’s a family business and some children are employed and some are not? Crafting good policies in that context is enough for a whole other article!
The bottom line is that equal means different things to different people.
And all our children are different, even if they are identical twins!
OK, so perhaps let’s aim for ‘fair’ instead?
That might make more sense. A ‘fair’ family policy might include supporting education costs, housing, medical, and an income supplement. The specific amounts distributed would still be a function of personal choice (what to study, where to live, how many children to have), and of some things that are outside anyone’s control (e.g. medical).
But … they would NOT be equal.
Fair is not equal, and equal is not fair.
What to do, then?
- Accept the fact that children are different, and that you can’t direct equal outcomes for them.
- Consider an approach of equal opportunity
- Pursue fair and equal process.
That means family members participate in the process of determining policies like these. That gives them all a voice and the ability to debate tricky issues like the ones I’ve touched on (and more).
If they have a seat at the table where policy is set, then they can have a sense of ownership and buy-in of the policy. They can understand how hard this stuff is for parents.
Giving stakeholders a say in policies that affect them goes a long way.
Conversation Starters:
Who wrote your family’s distribution policy?
What elements of the policy continue to be a source of … discussion?
In what ways are your children different?
Further Reading:
New Study Finds Rich Boomers Are Stressed About Handing Down Fortunes To Their Kids
Passing on great wealth to our children spells the end of society. Just ask Aristotle
Fair should not be equal in a family-owned business
Boomers are planning their succession. Here’s the hardest question they face, according to a veteran generational wealth expert
The Rich Need to Navigate ‘Fairness Versus Equality’ Among Children
The Family Playbook: Preparing for the First Outside CEO
Opinion | A Good Life: My friends are inheriting piles of money and retiring early. I am not. How do I deal?
