I've been working with a California couple this week. They had five children; two of them worked in their business, and the other three children did not. They were very sensitive to the fact that the two sons "in the business" should inherit the business when Mom and Dad pass away.
The mother, in particular, was emotional about wanting to set up an estate plan that was "fair" to all of their five children. The couple knew that their business was valuable, and Mom felt that if they left the business to the two children who were in the business, and left everything else to the other three children, then that would not be "fair" because the children getting the business would be getting significantly more than their other three children.
They did not want to short change their other three children simply because those three children were not suited to work in the family business. One solution Dad had already created was to purchase life insurance that would go to the three children who were not in the business. But still, the life insurance death proceeds would not be enough to "compensate" the other three children for not getting any of the business value.
We discussed a number of alternatives. One of the alternatives we discussed was to structure the ownership of the business so that after Mom and Dad died, the business (it's actually three businesses) would be in a trust. The two children in the business would continue working in the business and would continue to collect salaries. However, when the business would later sell, the sales proceeds of the business would be shared by all five children.
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