"Usually the problem comes," says Jim Budros of financial advisory firm Budros, Ruhlin & Roe Wealth Management in Columbus, Ohio, "because an estate owner, when making a legacy policy statement, says I want to treat all my kids equally. And the question is, 'What's equal?' And then we quickly launch into this question of fair or equal. Does fair have to be equal and vice versa? Equitable and equality and evenness are not always the same thing."

That means, says Budros, he must interrogate his own clients and pepper them with anecdotes about what fate has befallen other families. After all, many businesses, say planners, do not survive a first-generation transfer, and much much fewer get to the second generation without imploding or being sold. So treating kids equally has to take a back seat to what the long-term goal is.

"Because the minute you do that," Budros says about an even split, "you have to say 'What is the value of this thing?' And if this thing isn't going to be valued in a fair market way for sale-willing buyer, willing seller-then ... issues of alternative valuations come into play. Comparable valuations are very difficult. Valuations for gifts and family partnerships and so forth are so very different than fair-market valuations for sale. It's one of the most knotty problems."

Another method of trying to make things equitable is by recapitalizing the company, says financial advisor Barry Rabinowitz a CFP licensee in Plantation, Fla. "The ones that aren't managing the business, all they're interested in is 'Show me the money,'" he says. "In a recapitalization, the parents say, 'OK, I got the business growth and I recapitalize the voting stock, preferred stock and the kids that don't care about the business get a fixed rate of return, and the child gets the common stock and the growth. The other kids just want income, they want no voice in the business.     Everybody is different. It may be that after five or ten years they have to be bought out or given a lump sum or they're just going to get an income. There are a lot of variations you can do."

Sometimes the non-working kids want voting shares too, and the parents could give them some, but not enough to control the company-maybe one child gets 51% and the other two split 49%. Budros, however, sees this as another point of conflict.

"That creates sort of the classic inside-outside problem and puts the kids who are not on the inside without voting control at an extraordinary disadvantage. I just gave them two to three percentage points less, but caused them not to have any control, therefore no ability to help secure his own self-interest." Budros refers to this idea that as the "idiot's idea of fairness."

C. Zach Ivey, a planner with Lincoln Financial Advisors in Mountain Brook, Ala., says that in a perfect world you can buy life insurance to give the non-working siblings a fair shake, but sometimes with really pricey assets buying the insurance may be too expensive. In June, he was working with a family farm that had a value of $11 million. One son worked in the business while two daughters did not.

"The main thing is that from this day forward we have what I like to call opportunity shifting," Ivey says. "Any new business ventures or new growth from the business from this day forward [will] be in the son's name." In this case, he says, if the farm needs to acquire new land that requires a new company name, the son's name will be on it. Such shifting allows the active heir to receive some of the benefit today. Because it's an asset-rich business and the land has a tangible value, Ivey says that the family can put a buy-sell agreement in place that's triggered upon the death of both parents.

"The active child gets a first refusal of buying those land assets," Ivey says. "And he can go out and borrow the money and purchase them from his two sisters, and if he doesn't want to do that then they can sell the land and create cash that way."

First A Blueprint, Then The Tools

Budros distrusts life insurance as a first-rank solution to problems of legacy planning. The hard part of this subject, he says, is drafting the mission statement and making sure that everyone is on the same page and that everybody values the business the same way. When those problems are solved, picking the tools should be easy, he says, and life insurance isn't always the No. 1 choice.