Mark Modzeleski, Legacy Wealth Advisors of NY, LLC
Last week, we talked about goals and direction. Before we start building sophisticated plans with attorneys, accountants, wills, trusts, partnerships, LLCs, and tax strategies, we first need to understand what we are trying to accomplish.
I think about it very simply.
If I am driving from Central New York to Florida, I can either type the destination into my GPS and follow a plan, or I can simply start heading south. The truth is, there are dozens of ways to get to Florida. Some routes are faster, some are prettier, some avoid tolls, some avoid cities. But the most important thing at the beginning is getting headed in the right general direction.
As we get closer to the destination, the GPS becomes more and more important. The route tightens. The turns matter more. Precision matters more.
Succession, continuity, and transition planning work the same way.
The early conversations are not necessarily about documents. They are about direction. They are about goals. They are about understanding what we actually want the future of the farm to look like before we decide how to structure it.
This week, I want to talk about one of the hardest realities families face during transition planning: equal is not always fair, and fair is not always equal.
In a perfect world, every family member works on the farm, contributes equally, shares the same vision, and has the same capabilities. Ownership, leadership, and workload are all balanced evenly.
But we all know that is rarely how real life works.
Most farm businesses today are complicated organizations. There may be multiple generations involved. There may be spouses, cousins, nieces, nephews, and key employees who are not related at all but play pivotal roles in the success of the operation. Some family members may work in the business every single day, while others live across the country and have very little involvement.
And that is where things get difficult.
Let’s take a simple example.
Mom and Dad built a successful farm operation. They have three children. Two of them work on the farm full time. One brother manages one location with his spouse heavily involved in the office operations. The second brother runs another division of the operation, and his spouse also contributes to the administrative side of the business. Their responsibilities may differ, but both families are deeply involved in the day-to-day success of the farm.
The third sibling lives out of state. He still loves the farm. His children come back in the summers, fish in the ponds, help with chores, and remain emotionally connected to the operation. He is still part of the family. Still part of the story. Still part of Mom and Dad’s estate plan.
But his role in the actual business is minimal.
If Mom and Dad pass away and simply divide everything one-third, one-third, and one-third, that may be equal. But is it fair?
That is the question.
And while that example seems relatively straightforward, these situations become exponentially more complicated very quickly.
What happens when one child works harder than another? What happens when one family member is exceptional at operations but struggles with leadership? What happens when a non-family employee is one of the most important people in the organization? What happens when ownership and leadership should not belong to the same individuals?
Those are difficult conversations, but they are necessary conversations.
Another major area where this shows up is compensation.
Compensation inside family businesses can become incredibly emotional because we naturally want to treat family members equally. But just like ownership and inheritance, equal compensation is not always fair compensation.
I see this often on farms where multiple family members and spouses work in the business. One spouse may work full time managing payroll, bookkeeping, HR, scheduling, and operational administration, while another may help seasonally or part time with completely different responsibilities. Both contribute value, but their roles, time commitments, skill sets, and responsibilities are not necessarily the same.
The same can be true between siblings, cousins, or multiple generations working within the operation. Sometimes one individual carries significant leadership responsibility, manages employees, handles financial decisions, or drives growth initiatives, while another may primarily focus on labor or operational support.
Those roles matter.
Compensation should not simply be based on bloodline, last name, or emotion. It should be tied to services provided, hard and soft skills, leadership ability, decision-making responsibility, and the actual value that person brings to the organization.
One of the best ways to think about compensation in a family business is through the concept of cost of replacement.
If that individual were not part of the family, what would it cost to replace them in the open market? What experience would we need? What skill set would we need? What would we have to pay someone else to successfully perform that role?
When families begin thinking about compensation more objectively, it often helps remove some of the emotion from the process. That does not mean there cannot be flexibility because someone is family. There absolutely can be. But as a general rule, healthy businesses tend to compensate people based on the value of the role and the services being provided, not simply because they share the same last name.
One of the biggest mistakes families make is assuming that because someone grew up on the farm, they are automatically equipped to lead the farm.
That is not always true.
Some people are exceptional operators. Some are incredible with livestock. Some understand agronomy better than anyone else. Some are relationship builders. Some are visionaries. Some are financial thinkers. And some simply are not built to lead large, complicated organizations.
That does not make anyone better or worse. It is simply reality.
One of the most important things a family can do during transition planning is honestly evaluate the talent within the organization, regardless of whether those individuals share the family’s last name or bloodline.
Leadership matters. Decision-making matters. Vision matters. Communication matters. Accountability matters.
And sometimes the long-term success of the farm depends on separating ownership from leadership. In other words, the people who own the farm may not necessarily be the people who run the farm day to day.
That can feel uncomfortable to families because emotionally we often want everything to stay equal. But if the stated goal is long-term continuity of the operation, then fairness sometimes requires different structures, different responsibilities, and different outcomes.
The good news is there are many ways to bridge those gaps.
There are planning tools, legal structures, insurance strategies, buy-sell agreements, compensation structures, partnerships, trusts, and operational agreements that can help create balance between family fairness and business sustainability.
But none of those tools matter until the family is honest about the conversation itself.
What are we trying to accomplish? Who should lead? Who should own? How do we protect the operation? How do we keep relationships intact? How do we create opportunities for future generations without unintentionally damaging the business that generations before us worked so hard to build?
Those are not easy questions.
But they are the questions that matter.
And ultimately, if the goal is truly succession, continuity, and long-term transition of the farm, families must understand one very important truth:
Sometimes equal is not fair.
And often, fair is not equal.