Fair is not always Equal

You have probably heard “fair isn’t always equal”, but when I’m sitting across from a farm family planning their legacy. I often have to flip those words because the hard truth is “equal is not always fair”. What I mean by this is say you have three children with one who works on the farm, and the other two children do not. If you divide your land into exactly three, that’s equal. But is it fair to the child who needs the whole land base to remain viable?

Or is it fair to the non-farming children who now own an asset they can’t easily sell without bankrupting their brother or sister?

When we chase “equal” as a default, we often end up with a “liquidation legacy”. True fairness in succession isn’t about math; it’s about the mission. It’s about ensuring the farm survives while still honoring the love you have for all your children.

So, how do we fix it? We look at fairness through different buckets such as operating assets for the farming child, life insurance or non-farm investments for the non-farming children and buy-sell agreements that protect the land from being sold the moment you’re gone.

I recently just met with new farm clients who are in their 70’s. They have three adult children, one who stayed on the farm and has been working on it for the last 15 years, and two who are now living in the city.
The farming child has put in “sweat equity” into the farm over the years as it’s basically an unwritten contract. But here’s the problem: when it comes time to transition the farm, the non-farming children often see the land and operations current market value – not the years the farming child put in to grow everything. If the farming child must take out a massive mortgage just to pay out their siblings “equal share”, the farm often dies under the weight of this debt.

How do we honor non-farming children without bankrupting the farm?
First, I often do a “look-back” calculation to put a dollar value on those years where the farming child had lower wages in the farm rather than doing something else.
Second, we consider promissory notes, with the advice of a lawyer, to create a structured payout that doesn’t cripple the farm’s cash flow.
Third, we talk about first right of refusal. Ensuring the land stays in the family even if the non-farming children eventually want to cash out.

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