In my role as a family coach for wealthy families, one of the common issues that arises is the parents’ desire to be “fair” with their children and grandchildren. (I put “fair” in quotation marks because it really is an unusual term that is defined differently by many people and is almost totally based on perception.)

For whatever reason, and I really don’t know exactly where it comes from, fairness is an extremely important issue in our culture that drives many decisions within families. Take, for instance, this past week’s events over Christmas — parents (regardless of their financial status) are quite concerned about giving the equivalent financial value (or perceived value) in gifts to their family members.

There are many challenges related to parents or grandparents trying to be fair with their family members. Let me cite a few:

The “givers” have their own perception of what is (or should be) fair. Most people have a hard time accurately or concisely describing what “fair” is, but they sure have a strong sense of it intuitively. Often it is described in terms of being “equal”, but when pressed about specifics or circumstantial differences, the concept of equal usually fades into the background.

The “receivers” usually have a different view of fairness from the givers (and from other receivers).Most of the family members with whom I work are genuinely grateful for any gift they are (or will be) receiving. The adult children and their spouses do not appear to be greedy, unthankful or have a sense of entitlement. They understand that the “givers” have the right to do whatever they want with their possessions. Nonetheless, when probing deeper, they often express a different viewpoint of what would be “fair” in how the gifts are distributed across the family — often not to their own benefit but out of concern for one of their siblings or in-law’s.

What is “fair” changes over time (pretty easily and often). Let’s take the recent volatility in the financial markets and real estate values. Suppose, in May 2008, some parents gave one of their children $100,000 in a blue chip stock; they gave their second child a house in Atlanta worth $100,000; and they gave their third child $100,000 in cash to use as they wished. Let’s assume each child wanted and agreed to the form of the gift they received (this isn’t always true, you know). So not only were the gifts “fair”, they were exactly equal in monetary value in May 2008 (which is an unusual occurance). But fast forward to May of 2009. The blue chip stock lost 40% of its value, so it is now only worth $60,000. The home in Atlanta lost 50% of its value and can’t really be sold for virtually any price. And the $100,000 in cash is worth $102,000 after they earned 2% on it in a money market account. Are the gifts fair now? Should the parents do some additional giving to make the monetary values equal?

When do you want fairness to exist? When do the givers want things to be fair. Now? Next year? When the business sells? When everyone has completed college? When dad dies and his life insurance proceeds create cash to equalize the gifts given? When both parents die and everything will be “equaled up”? “When” is an important question to answer — for a number of reasons. First, you have the most control over events closest to the present. So “now” seems to be a pretty good option. However, you may not have the liquid assets to make everything fair now, so “now” doesn’t work for many families. Secondly, the further out the “when” is, leaves more variables to chance and the likelihood of fairness not being achieved. Is it “fair” to your second child to wait until the business sells (say in 5 years) to make things fair, and they get divorced and become a single parent needing cash flow two years from now? Or is it “fair” to the eldest child who is running the business (and buying it from you) to wait to realize their inheritance when they sell the business (potentially) in twenty years? I can run a lot of scenarios that create problems.

So what do you do? Give up on the ideal of “fairness”. Maybe, but probably not. I try to help families (usually the senior couple or single parent) clarify what being “fair” means to them, to the best of their ability currently. Secondly, answering the question “when” is critical — and it differs significantly across families. Finally, I encourage family members to think more in terms of values, rather than fairness. Since fairness is a moving target across time and is perceived differently by almost everyone involved — I find making decisions based on what is important to you as a better guideline.

Is education for the next generation important to you? Then figure out a way to fund that. Is affordable housing important? Then figure out a way to help younger family members achieve this goal. Travel? Stay-at-home moms for your grandchildren? A financial safety net? Guaranteed health insurance? Whatever is important to you — pursue that as a gift.

You will eventually have to make some decisions about what you view as being “fair” — assuming you have more than one child. Do you try to equalize your gifts to your children? Or do you try to equalize them at the grandchild level (one of your children has two kids; his sister has three kids; and the youngest has one of his own and three stepchildren)? It’s not easy. But, hey, that is what I am here for — to help you think and talk through the issues, so you can come to a decision you can live with.

Remember, you don’t have to have a lot of money or “stuff” for this to be an issue. Dividing up the household furniture and belongings raises the same issues. Whatever you do, don’t let one of your kids or grandkids (who does have a greed or entitlement issue) “guilt” you into making decisions you don’t want to.

Until then, have a great and safe New Year’s celebration.

This past week we had the privilege of attending a family union with my wife’s family in Chicago.  There were almost 40 of us, ranging in age from 3 to 74, including my wife’s parents, six of the seven adult siblings (and spouses), and 23 of the 25 grandchildren (and two spouses).  Although it was a cool and sometimes rainy Memorial Day, we had a grand time together.

What made it especially enjoyable was reconnecting with each family member — seeing how they are still the same person they were a few years ago, how the younger family members have changed and developed their unique abilities, and hearing about plans for the future (it was also fun to retell some funny incidents from past gatherings). But what was most fun for me was to play together (or watch others play).  We played whiffleball (where I experienced the classic American tradition of pulling a muscle while running from first base to second).

Some enjoyed just “hanging out” together, but we all delighted in the homemade ice cream.

Just a couple of observations I want to note.  Although family reunions seem to have a negative connotation in our culture, I believe they can be a wonderful celebration of loving relationships, caring for one another, and the heritage of one’s family.  As part of the Sawyer clan, we are blessed to having loving parents, siblings, in-law’s, and cousins — and it is a joy to feel supported in your life’s journey as well as give encouragement to others.

Family reunions provide an opportunity to reflect on how we are the same — our common values, similar talents, and how we look alike (well, how they look alike).

But we also are able to see and celebrate how we are different — from different generations, how individual families differ, and the unique giftings each person has. It seems that healthy families value their commonalities but also cherish the uniqueness of each person.

As we often talk about the importance of ongoing communication and relationships among families who own businesses, it is clear that getting together as a large family unit is important, valuable and enjoyable whether or not a shared business is involved or not.

If you haven’t had a large family gathering in a while, think about planning one.  Start with whoever can attend (don’t wait for everyone to be able to come — it will rarely happen).  Keep it short.  Have good food.  And play together.  It can be a great time!

There is an old saying, “It is good for brothers to get along”. And it is true. But one of the most frequent problems I see in my work is the challenge of brothers “getting along” in business. And the issue plays out in many different ways and settings:

*Brothers who have been working together for years (and now are in their 50’s, 60’s and 70’s) and have built a successful business together, and are now in conflict about business succession issues — especially about how and whether the next generation should be involved in the business.

*Adult sons of the business founder who are working in the business, in different roles and levels of responsibility, and struggling with what is fair in compensation, power, influence and privileges.

*Adult children (for it is not always just brothers, but their sisters, too) — some of whom are in the business, some who are not directly involved in the day-to-day management — who are owners together and have significant conflict over the direction of the business and how resources should be distributed (i.e. dividend distributions, bonuses for the managing owners).

*One or more siblings who are working hard, taking their responsibilities in the business seriously, along with one sibling (usually a brother) who is “coasting” — not working very hard, not putting in the hours, not getting the job done — but who is pulling the same benefits (income, perks) and playing a lot more than his siblings. Result: plenty of resentment to go around.

There are lots of variations.

You may or may not remember that I grew up in a family owned business (a manufacturing company). I am the youngest of four sibs, and although I did not work in the business as an adult, I was an owner and on the Board. My two brothers worked in the business (as did my sister later on) and we had our own challenges — personality differences; some were owners and managers, others (me) were non-managing owners. So I speak from experience — it is good for brothers (and sisters) to get along. And it is a pain when you don’t.

You may have heard that there are two “CEO’s” in family businesses: the Chief Executive Officer, and the Chief Emotional Officer. The latter is often the matriarch in the family system (she may be the wife, mother, mother-in-law, or grandmother depending on the stage of the family). And one of the (self-imposed) roles of the Chief Emotional Officer is try to ensure that everyone in the family gets along. (Good luck!)

In fact, when identifying goals for the family and the business, the most frequent goal cited by the matriarch is either: “I just want everyone to be happy.” or “I would like everyone to get along peacefully.”

So, what is the point, practically? First, it may be helpful to recognize that conflict between brothers in business is a common occurrence. If this is your current (or past) experience, you are not alone.

Secondly, it is an important issue to pay attention to. Many successful businesses have been shipwrecked by unresolved conflicts among siblings in business together. It is to everyone’s benefit to address issues early, before they become unresolvable.

Finally, it is critical to recognize that relational issues — trust, healthy communication, acceptance of differences, resolving conflicts in a healthy way — are just as important for the long-term success of a family-owned business as are good management and execution of the business plan.

If you, or your family’s business, is struggling in this area, I’d love to help you work through the issues in a way that will bring a positive resolution. If I can help, let me know.