Why equal isn’t always fair, and how to talk with your children about it.
Parents can face a very difficult decision when deciding how to divide their assets among their children upon their death. Many opt to split their assets equally among the children, deciding that equal distribution is the fairest. Many times, however, unequal distributions may be the most equitable.
Why Equal May Not Be Fair
Family circumstances may make it so that giving each child the same inheritance could be unfair. These circumstances might include:
- If one child takes care of the parents in their later years or handles their finances
- If one child has a very high-paying job, while another child has a difficult time making ends meet
- If one child does not have any children, but another child is raising a large family
- If one child cannot be trusted to have a large, lump-sum inheritance
- If one child has a large amount of medical bills for themselves or their spouse/children
These circumstances are just a glimpse as to why equal distributions might not make the most sense, but every family is different. It is important to look at the dynamics within your family and determine if you need to make any adjustments to make distributions more fair under your specific circumstances.
Family Heirlooms and Sentimental Items
Another issue that many families run into with dividing their assets is that not everything can be boiled down to dollars and cents. When children are gifted items such as family heirlooms or other items of high sentimental value, it can be difficult to know when distributions are equal. Moreover, what might be of high value to one child might be completely worthless to another. Nonetheless, this is all important to consider when making distributions.
Communication is Key
If asset distributions are unequal, children can be caught off guard if they do not know the reasons behind the choices. If children do not know why they received less of an inheritance, it can cause feelings of not being valued by their parents, or a potential conflict between siblings. It is important to discuss with your children the reasoning behind your allocations. Discussions in person before your passing are ideal, as they allow the children to ask questions, understand your reasoning, and voice their opinions. A personal letter explaining your reasoning, kept with your estate plan, can also help. The letter itself doesn’t change who receives what; your will or trust does that.
Contact an Estate Planning Attorney Today
A skilled estate planning attorney can guide you when deciding what asset allocation might be best for you and your family, as well as help you formalize these wishes in proper documentation and forms. To speak with an attorney, please call our office at 608-784-8310, or send us a message via email.