16 Feb What’s Fair? Choosing One of Your Children as Your Successor
Not long ago, I was sitting with a business owner and his wife who were beginning to think seriously about succession.
The business had been started by his father decades earlier. He had grown it, modernized it, and carried it through multiple economic cycles. Now, as he looked ahead, the question wasn’t whether the business would survive. It was what survival might cost his family.
They have three children. One son works in the business and has for years. The other son and their daughter have chosen different careers. As the conversation unfolded, he said something quietly and without drama:
“I know who should run the business. But I don’t know how to do this without it causing problems between my kids.”
That question is where good succession planning begins.
The Fear Beneath the Question
The quiet fear sounds something like this:
If I give the business to the child who works in it, will the others feel left behind?
If the business grows significantly, will they resent the upside going to just one sibling?
Will the child in the business feel entitled to everything because he “earned” it?
Will this fracture relationships I worked my whole life to support?
When you have these questions, they need a better answer than “split everything equally” or “they’ll work it out.”
Equal Is Simple. Fair Is Thoughtful.
One of the most important realizations in family business succession is this:
Equal and fair are not the same thing.
Equal is easy. But fair requires judgment.
Families that struggle tend to force equality onto unequal circumstances. Families that succeed do the opposite. They design fairness around contribution, risk, and future responsibility.
What You Need to Think Through
Before structures, trusts, or agreements, there are a few core questions every successful transition addresses.
1. What is the business . . . and what is labor?
The challenge arises when compensation for work and rewards for ownership are blended together.
If the child in the business is paid primarily through ownership distributions rather than market-based compensation, resentment can build from both directions. The operating child may feel underpaid for effort. The non-operating children may feel excluded from returns they perceive as inheritance. Over time, neither side feels treated fairly.
2. Who should benefit from future growth and why?
Future growth rarely happens by accident. It comes from leadership decisions, long hours, and risk borne by the person running the business.
When growth accrues to children who are not involved, the operating child may feel discouraged or constrained. When growth accrues only to the operating child without context, siblings may feel written out of the family story. Planning works best when future appreciation is addressed deliberately rather than left to assumption.
3. What does “fair” mean to you, not just to your children?
The difficulty is that children often measure fairness differently, especially when their roles differ.
Without clarity from the parent, each child fills in the gaps with their own assumptions. Those assumptions harden over time. What begins as silence meant to keep the peace often creates more friction than an imperfect but honest explanation ever would.
How Other Families Handle This Successfully
Families who navigate this well tend to use a combination of strategies, none of which rely on a single blunt solution.
1. Freeze value for non-participating children
One common approach is to “freeze” the value of the business for the children not involved, often through trusts or buy-out mechanisms, while allowing the operating child to benefit from future appreciation.
For example, assume the business is worth $6 million today. The parent may structure the plan so that the two non-participating children each receive value equal to $2 million, fixed at today’s valuation, often through trusts or promissory arrangements. The operating child receives the business outright, including all future growth beyond that $6 million baseline.
If the business later grows to $12 million, the appreciation belongs to the child who led that growth. The other children received fair value based on what existed when the decision was made, without being tied to future risk or effort.
This acknowledges past value without penalizing future effort.
2. Use other assets to equalize
This approach recognizes that fairness across a family is measured in total outcomes, not identical assets.
Non-operating children may receive real estate, investment accounts, or life insurance designed to balance overall inheritance value. This allows each child to receive meaningful value without forcing shared ownership in a business they neither want nor understand.
3. Create clear governance, not assumptions
Successful families clearly define who controls day-to-day and strategic decisions, when ownership interests can be sold, and how exits are handled if circumstances change. They also establish how disagreements are resolved and what happens if the operating child no longer wishes to run the business.
These decisions are documented while options are wide and emotions are calm. Governance fills the gaps that assumptions inevitably leave behind.
4. Communicate early. While you’re alive and well
I once worked with a family where the parents explained their plan to all three children years before any documents were signed. One child disagreed openly. Another was relieved. The third needed time to process it.
Years later, when the plan was implemented, there were no surprises. The conversations had already happened. The documents simply reflected what had been understood for a long time.
The Mistake to Avoid
The most damaging choice is postponement.
Waiting until death to “let the documents speak” often leaves too much unsaid. Legal documents distribute assets. They don’t explain intent.
And intent is what preserves relationships.
Where to Go From Here
We work with a select group of family business owners each year who face exactly this crossroads. Second-generation leaders balancing legacy, fairness, and continuity.
We are intentionally selective. Because these decisions shape families for generations, not just balance sheets. If you’re thinking through succession and want to do it with clarity, intention, and respect for everyone involved, you can apply to work with us here: