An epic scene from the Lion King provides a great backdrop in discussing the allusive nature of fairness.

Picture this:

Scar, the broody discontent brother of King Mufasa who was born into privilege, plays with his soon-to-be miserly lunch – a hapless frightened mouse.

“Life is not fair little one.  You see (sigh), I will never be King (dramatically rolls eyes in self-pity) and you (turning his eyes down to mouse in fake empathy) …… well…… you will never see the light of day again.”

Our anti-hero’s monologue is then rudely interrupted by a perky messenger conveying the message that he has been summoned by the King – which causes him to lose his meagre lunch in his attempt to put the messenger in his place.

It is unfair, Scar, unfair indeed.

What is fairness?

Fairness, it seems, is an allusive animal. The pursuit of it is like pursuing an African sunset; its real and right there in front of you, but you cannot reach it, the view depends on where you stand.  As you move, the horizon changes and when you compare what you see to someone else’s view of it, it differs!

Fairness is a process, not an outcome.

The outcome of the process may well be either an equitable outcome or an equal outcome.  Equitable outcomes usually take individual contribution into consideration whereas an equal outcome discards it.

From a fairness point of view, equality assumes a horizon that looks the same for everyone regardless of their vantage point.  This, we know, is simply not so.  Everyone looks at the horizon from an individualised vantage point and experiences what they see differently.  Equality will therefore seldom be experienced as universally fair by individuals.  It is an intellectually lazy shortcut and we live in a world where we are increasingly able to solve more and more complex problems making this shortcut untenable.

Experience as an estate planner

Early on in my career pursuing fairness seemed very easy to me, as one would simply default to equality as a proxy for fairness.  Many a client took the view that what they have is the result of their own toil and where no legitimate expectation of entitlement existed amongst any of their heirs, who can complain about an equal share?

However, as my career progressed, it became clear to me that almost every single “inheritance” dispute, whether it’s a battle in a diseased estate, a battle for trust assets or a battle for control over a family company, have centred around the differing perspectives of fairness amongst individual family members. Equality lead to inequity for some just as much as equity lead to inequality for others.  The perception of unfairness presented itself in both scenarios!

My own perspective on the matter had to evolve to understand this.

I came across research by George Samara and Daniel Avenus of the ESADE Business School of the Roman Llull University in Barcelona which helped me to form a better idea of the science of fairness.

The scientific guidelines provided by them has been of great use where it comes to complex estate planning scenarios involving multi-generational family businesses, trusts where the founder has passed away and where family members and non-family members have contributed in varying degrees to the growth and preservation of family wealth.

The authors, quoting a host of other research, convincingly propose the following guiding principles in pursuing fairness – which I have adjusted for solving estate planning matters.

Commitment to fairness

A perceived honest commitment to pursue fairness plays a massive role in the acceptance of the outcome.  Even unpopular decisions would survive a fairness test when there was an intellectually honest commitment to fairness.

To use an example: a person who wants to leave his estate to a trust for his three children.  He directs that the youngest of his children must attain a similar qualification than the older two, before the trust holding their inheritance, will be distributed equally amongst them.  He feels this would constitute a fair outcome.

Verbalising expectation of entitlement

To verbalise an expectation of entitlement might seem a bit odd when considering a straight bequest from a will, but when it comes to time spent in the family business whilst everyone else has been cruising the world, it becomes a different proposition.  Part of the commitment to fairness would include creating an environment where it is OK to verbalise expectations of entitlement.

In the example above: The eldest heir, upon hearing the plan, expresses the expectation to be able to start a business with the skills she acquired during her studies. However, the retention of all the funds whilst her younger sibling is still attending school, robs her of the opportunity to start a business.  She feels that her expectation is fair.

Give everyone a voice

Quiet discontent is often the primary cause of a lifetime of unhappiness and resentment amongst family members.  It creates festering wounds and a fertile breeding ground for future family feuds and inter-generational animosity.  Giving everyone a voice and then speaking up is the antidote.  Sometimes the expectation of entitlement needs to be voiced on someone else’s behalf or a person might be encouraged to speak up or desist from gossip or creating discontent behind the scenes.

Again using the example above: The youngest child, upon hearing the plan explains that it is unfair to place pressure on him to study as soon as possible after school; or study at all; when none of the other siblings had this pressure placed on them.  He would have loved taking a gap year and feels this is a fair request.

Being flexible

Realising the rolling nature of our horizons ensures that plans and strategies can change with the times.  Geopolitical risks and opportunities might require the sale of the family business or the farm or assisting a particular family in a different manner than what was foreseen.  What might be perceived to be fair today, might constitute an unfair course of action tomorrow.

In our example above: whilst studying towards an engineering degree, the youngest child is in a motor accident and unable to finish the degree.  No one could have foreseen this, but the directive in the trust remains.

Be consistent

Consistency is the greatest currency when buying trust.  All the foregoing principles needs to be consistently applied:

• Be consistent in your commitment to be fair.
• Be consistently willing to verbalise your expectation of entitlement.
• Consistently ensure that all voices are heard and brought to the surface.
• Be consistent in adjusting plans and strategies to the prevailing scenario.

In the example we are using: The person would have been able to set an amount aside to the youngest child earmarked for studies or to use for other purposes.  The eldest would have been able to extract her portion from the trust not needed to safeguard the youngest sibling’s opportunity to study and middle child (bless his soul) would have been happy whichever way things went.

Conclusion and learning

Being content as an heir is often the result of the pursuit of a process of fairness by those who created the wealth.  Discontent is the fruit of lazy simplification of the complex nature of real life.  Fairness, like life, is relative and its complex.

In a cruel twist of irony, as Scar battles with the existential problems of life and its void of fairness, the blissfully unaware Mufasa is trampled to death in a gorge by a herd of stampeding Wildebeest sent upon him by his disgruntled brother.

It is unfair, Mufasa, unfair indeed.

 

Written by Louis Venter

Wealth Succession Director