“Life isn’t fair.”
We’ve all heard it at one point or another. Yet, in enterprising families, the definition of “fair” is nuanced and seldom the same as “equal.” Conflict often arises in families and wealth disparity tends to be one of the key causes. Family growth across generations increases the potential for this disparity.
As the wealth is distributed among more and more family members, some branches seem to benefit more than others based on their size or need. Other contributors to wealth disparity include different family members’ personal or professional choices. Wealth disparity can put strain on relationships, but digging into underlying needs — and the underlying cause of the disparity — can often keep it from being a wedge.
Here are three tips for navigating wealth disparity:
1. Understand that in families, “fairness” is often tied to need rather than to a percentage of ownership or pay based on merit.As a result, disparities in support may exist.
2. Be clear and consistent in communication about wealth transfer.Conflict arises when recipients’ expectations are unrealistic, when wealth is used to exert control, when there are blurred lines between gifts and transfers, and when there is insufficient communication paired with the transfer.
3. Communicate gift-giving guidelines between branches and generations. Avoid unintended shaming, perceptions of entitlement or overstepping boundaries during holidays and birthdays.