How do we divide assets fairly?
A reader who does not want his name mentioned asks: What would be a fair division of assets for a Filipino-Chinese family of four siblings, two males and two females? Assets include a family business, where all four have been working for since graduation; and the primary residence of parents, with the male children and their families living with the parents. The female children are married and living in their own homes. The spouses of the male siblings are also working in the business, having married into the family. What is a fair way to distribute assets since parents are near retirement?
My reply: Fair is in the eye of the beholder, and fairness is more a perception rather than a strict mathematical division. Fairness does not necessarily imply equality (see my column on March 21, 2014), though the easiest way to divide assets is to convert everything into current value and divide accordingly, liquidating assets if contentious issues arise.
However, the ancestral home may hold more value than what the market prices it to be. For instance, how much is sentimental value worth, especially if you have lived all your life there and loved the house? For many who have happy childhoods, their first home would be priceless.
Since fairness has various connotations, I am not surprised you get different answers from your friends.
Most parents prefer strict division—that is, dividing the entire assets (converted to current peso value) by four in your case. Parents declare that they love their children equally, and they believe that to show their love, they need to divide everything fair and square.
However, the second or third generation in many family businesses I know do not favor strict division, because some siblings believe they deserve a bigger share. Perhaps they were the ones who built the business together with the parents, and so they deserve the lion’s share.
Sometimes, the males believe they deserve more just because they supposedly have the responsibility to continue the family bloodline, while the females are supposedly under the care of other families once they marry.
While I may find this antiquated, I respect tradition—as long as the female siblings do not resent this arrangement.
Some parents divide assets and give more (often, secretly) to their favorite children (parents try hard not to have favorites, but they are human and often do).
Some families decide to leave the decision to luck. One family (whom I have written about) divided assets by drawing lots, with far better results than families with lawyers representing individual interests.
Sit down now with your parents and siblings, while the former are still alive, to counsel everyone. Ask everyone what they believe a fair division should be, and work from there.
If your family members are close and have the company’s best interests at heart, you will work things out. But do this earlier than later, and if needed, get a professional who can be objective to guide you through the process.
The best division is the optimal compromise that everyone can live with.
Catholic Mass Media Awards
I’d like to thank the Catholic Mass Media Awards for the Special Citation for this column. Thank you, too, to Raul Marcelo, Tina Arceo-Dumlao, and Princess Ominga of the Business Section, for ensuring that what you read comes out in the best way possible.
Thank you, readers, for your sustained support. Rest assured I will continue to focus on best practices and feature family businesses from which we can all draw inspiration.
