Managing Sibling Wealth Disparity — Blair Trippe

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Forging a close relationship among siblings during childhood is hard enough, but as siblings become adults, disparities in wealth that may develop can challenge even the strongest relationships. In business-owning families, the potential ramifications are extensive. The dynamic doesn’t just play out in the personal lives of the immediate family; it also can impact the alignment of corporate vision, tolerance for risk, and overall decision making, thus affecting all stakeholders.

Understanding sibling wealth disparity

The underlying causes of sibling wealth disparity are important to consider because they raise issues of entitlement, individual responsibility, fairness, and intention. Did the wealthy sibling earn his or her wealth through hard work and talent? Did the less well-off sibling lose his or her wealth through bad judgment, frivolous spending, or illness? Did one sibling marry into wealth? Did the allocation of inheritance benefit one branch disproportionately? Do all siblings agree that more inheritance was due to the one who cared for Mom and Dad in their old age? Do the siblings share the same understanding of what caused the disparity in wealth?

Sibling wealth disparity also must be viewed in terms of relative need, or perceived need. The brother with no children, a good job and a modest lifestyle may view a significant inheritance as a windfall that enables him to travel. His sister may be facing college tuition for her three children, a mortgage, and expenses barely covered by her income and her husband’s. To her, the same inheritance may just help cover necessities, and she may feel that, based on her needs, she should have received a larger share. It is easy to imagine how resentments over inherited money could take root between these siblings.

Behavior, lifestyle choices, and frugality all derive from one’s core values. When these are not shared or mutually respected, siblings’ perceptions of financial need may not be aligned. This can lead to misunderstandings, miscommunication, and outright conflict. Put another way, without common values and mutual respect, the siblings may lack a common language to talk about the use and purpose of money.

The existence of sibling wealth disparity does not, in itself, cause conflict. Although there may be jealousy or disrespect lurking in the background, how the family responds is determined by how the wealth is used (or not used), coupled with perceptions of individual needs among the siblings and the underlying causes of the wealth disparity.

The sibling relationship

Siblings typically experience go through a period of separation. During the separation period, they establish a sense of self, independence, and purpose. The re-establishment of siblings as a family unit in their adult years must often be an intentional process. The process requires energy and commitment from each sibling, as they each must overcome the emotional baggage and behavior patterns they carry from childhood.

Enterprising families may face an additional complication. Family wealth or access to a family business may delay or inhibit the process of separation and self-discovery. Siblings who remain connected to the family for financial and professional reasons may have difficulty growing out of their childhood relationships. They may fear the loss of economic benefits if they don’t stay connected to the family (or the family business).

The rewards for siblings who can re-engage successfully as adults are significant because the sibling bond can be the most durable and reliable of all relationships. They may not always be the closest of relationships, with frequent contact and camaraderie, but they can still be among the deepest. The ability to manage wealth disparity can be of great value for strengthening bonds among siblings.

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