Should I treat all my children equally?
Minneapolis attorney Sally Grossman explains that children should not be treated equally in business succession planning.
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You absolutely should not treat all of your children equally. That is probably one of the worst things you can do in most situations. And the reason is because you may have some children who are active in the business and some children who are not active. And if you take your common stock and you give it say four ways among your four kids and you have one who is active in the business and three who aren’t, now what happens after you’re gone?
Well the three who are inactive can outvote the one who is trying to run the business and that just isn’t right. So don’t give it to them equally. You can treat them fairly. It’s very important that they get equal value or approximately equal value. Treat them fairly, but don’t treat them identically. And I think if you don’t do this, I think you’re ducking the hard questions and I think you’re really making it hard for your kids. You’re leaving a mess that you didn’t have the courage to deal with. So other than that, how do I feel about it?