How to Treat Your Children Fairly When Only One Wants the Family Farm
Family reviewing farm succession papers at rustic farmhouse
Many parents face a common challenge in farm succession planning: one child wants to continue the family farm or agribusiness, and the other does not. Parents want to be fair, but what feels fair emotionally may not always work financially or operationally. This guide walks through the most common approaches, from simple to structured, and helps families plan effectively. Each option assumes a revocable trust as the foundation, with wills as a backstop for assets outside the trust.
Method #1: Equal Ownership Between Children
A typical starting point is giving both children equal ownership of the farm or business. For parents, this feels neutral and straightforward. For children, especially the one operating the business, this often creates future pressure to buy out the sibling’s share. Even under the best conditions, the cost of a buyout can be significant, and disagreements about timing or valuation can add stress.
Example: After the parents pass, both children inherit equal stakes in the farm and its operations. The child continuing the farm manages day-to-day work and keeps the business running. The non-operating child has no management role but owns half the entity, which may eventually need to be sold back or bought out.
Operating child receives
50% ownership, responsibility for running the farm
Non-operating child receives
50% ownership, no operational responsibilities
Required planning documents
Revocable trust holding ownership interests
Deeds transferring land
Operating/shareholder agreements
Buy-sell agreement for future buyouts
Pour-over will
This approach is simple and easy to explain but shifts financial and operational responsibility to the child running the business. Parents should consider whether the business can realistically support a future buyout.
Method #2: Gradual Buy-In With Estate Rebalancing
Some families prefer to spread ownership transfer over time. The operating child gradually acquires more of the business, either through payments, gifts, or both, and any unpaid portion can be offset by other estate assets like a home, second property, or financial accounts. This balances the overall inheritance while still supporting business continuity.
Example: The parents want the farm to stay operational, so the child actively farming receives increasing ownership over several years, while the sibling receives more of the non-business assets. This ensures that the child who isn’t involved financially benefits from the estate without complicating operations.
Operating child receives
Increasing ownership over time, operational control
Non-operating child receives
Larger share of non-business assets (residence, second home, financial accounts)
Required planning documents
Revocable trust coordinating ownership and offsets
Purchase agreements or promissory notes
Gift documentation if applicable
Updated operating agreements
Pour-over will
This approach spreads financial obligations, aligns with cash flow, and can reduce potential friction, but it requires clear recordkeeping and communication.
Method #3: Business to One Child, Other Assets to the Other
When shared ownership between parents and the operating child is too complex or risky, parents may give the business outright to the child who wants to operate it. Life insurance or other assets can then help equalize the inheritance. In many plans, the operating child pays life insurance premiums to offset the uneven distribution while maintaining control of the business.
Example: The parents’ farm makes up most of the estate. The operating child inherits the farm and day-to-day responsibilities. The non-operating child receives personal assets like the family home, investment accounts, and life insurance proceeds designed to balance the overall value of the estate.
Operating child receives
100% ownership of the farm/business
Responsibility for running the business
Pays life insurance premiums to equalize distribution
Non-operating child receives
Non-business assets (residence, second home, investment accounts)
Life insurance proceeds to balance inheritance
Required planning documents
Revocable trust allocating business and non-business assets
Life insurance policies owned by parents or trust
Updated entity documents
Pour-over will
This approach clarifies ownership, avoids sibling buyouts, and reduces conflict, though it requires careful valuation and insurance planning.
Control, Protection, and Exit Planning
Across all approaches, succession plans should address decision-making authority, protection from divorce or creditors, and exit options if a child wants to sell. Tools like voting/non-voting shares, trust-based ownership, rights of first refusal, and agreed-upon valuation methods help reduce disputes. While they do not change the plan structure, they make it more stable and predictable.
Fair vs. Equal
Fairness does not always mean equal dollar value. The child running the business assumes responsibility and risk, while the non-operating child may gain more liquidity and flexibility. Open conversations about goals and expectations are essential for a plan to feel fair to everyone involved.
Questions Parents and Families Should Discuss
Parents reflecting on priorities:
When I picture this working well ten or twenty years from now, what does “fair” look like to me?
How important is it that the business stays intact and operating after I step back?
Am I comfortable if one child receives more value to support long-term business continuity?
Parents asking children:
Do you want ownership or mainly financial security?
How involved do you realistically want to be once I step back?
What concerns would you rather discuss now rather than leaving for later?
Children talking among themselves:
How should decisions be made if both are owners?
What expectations do we have for timing, control, and exit options?
How flexible should the arrangement be if circumstances change?
Questions I ask parents as part of planning:
Which conversations should happen now to clearly explain your reasoning?
Which outcomes matter most to you, and which do you most want to avoid?
Closing Thoughts
Farm succession planning is about more than dividing assets. It’s about clarity, preserving relationships, and creating a structure that works for both the family and the business. Using a revocable trust as the foundation, combined with open communication, increases the chances of long-term success and equitable outcomes.