Hi Rabbi Daniel and Susan, I’m proud to think you put my location pin on your map years ago. 😊. really seeking wisdom here. I have built up a successful family business and bought half the shares and was told I would inherit the other half. Now because the business value has increased from 2 million to 20 million my mother thinks it’s too much to pass on to one family…better to gift half the shares to my brother along with cash, and better to gift my brother-in-law zero and gift his 4 children half a million in cash each…. Is there value in sweat equity?
Both non farming siblings are extremely successful in their respective fields but the thought of 47% of future expansion going to my brother seems a bit much also…My mother studies the Bible every day. Is there wisdom for us that we can consider?
Thanks to you and God.
Bob
Dear Bob,
Congratulations on expanding a family business so successfully. The first thing we must say is something we repeat in many of our answers. We can only respond to the person asking the question. Your mother is not writing to us –you are!
Perhaps she is interested in what we have to say. But she very well may not be. In that case, the question is how best for you to cope with the reality in front of you, that much of your sweat equity is going to build both your own and your siblings and their children’s fortunes.
You use the passive voice when you tell us “[I] was told” but it is important to know who told you. Did your father and your mother together tell you that you’d inherit the other half? Did they also inform the siblings of this intention? Is it in writing? Succession patterns are incredibly tough because so much emotion is combined with so much legality. Add in the money realities, and every case is uniquely complex.
If your brother inherits the remaining half of the shares, does that mean that neither of you will possess voting control of the corporation? Is it a corporation? C-corp or S-corp? Have you read the articles of incorporation?
In short, Bob, you’re in a typical family business succession process which is likely to be both volatile and tedious. You haven’t given us nearly enough information for us to provide the direction to take for maximum chance of a propitious outcome. It is possible that you yourself do not yet have a full and accurate roadmap of the landscape in all its layered complexity. If this is the case, then your first step is to gather all the relevant information, compile it and review it again and again so that your subconscious can throw in its efforts too. If your mother is open to hearing from you once you have the facts in hand, that is one thing. If she is presenting you with a “my way or the highway” situation then you are in an entirely different scenario.
In conclusion we want to remind you that you have already successfully created about $18M of value. If necessary, you could do it again, but you only have one family. You may well decide that “fairness” is perhaps not so much the goal as is family unity.
Please let us know your decision. With best wishes for peace of mind and calm nights of restful sleep.
Rabbi Daniel and Susan Lapin
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That’s a really valid concern, and it comes up often in family situations like this. One option worth considering is a buy-and-sell agreement—it can help balance things out by allowing Bob to purchase the shares, mom or her estate has the funds to distribute fairly among everyone. It’s a practical way to make sure no one feels left out and that the farm can continue smoothly.
It might be a good idea to chat with a financial planner to explore how this could work for your specific situation. Regard Yolanda – South African Financial Advisor
Susan wrote in reply:
Interesting that you are a S. African financial advisor, Yolanda, because one thing we thought but neglected to say was that depending on the country this gentleman is from, it is important to know the law. We hope Bob does put time into understanding the details and, should his mother choose to do so, a financial planner who can weigh in without emotional involvement might be very helpful.
Hmmm, what a predicament! He personally bought half the shares. Was he the only family member involved in growing the business after buying those shares? His work to build the business and keep it going is completely valuable and worth so much in time and sacrifice. However, so is his parents original investment and their time and sacrifice. It seems like mom is trying to be fair and spread the wealth, even if the other siblings are doing well and were not involved, and maybe she was never fully onboard with the transfer of shares inheritance. Hopefully, however it is resolved there will be no hard feelings and resentments because it’s just the worst when one is mistreated by a sibling after a parents’ passing and seemingly irreconcilable offenses occur. It’s fortunate that this is out in the open prior to her passing, so that there is still a chance for an arrangement that everyone will feel is fair. I’ll say a prayer for peace and a unified resolution.
Susan wrote in reply:
Katie, I have just added this Ask the Rabbi to our list for a Deep Dive. The topic will be what lesson parents can learn from questions like this one that show how easy it is for inheritance to turn into something that divides a family and leaves hurt feelings rather than a blessing.