Fair Doesn't Always Mean Equal in Estate Planning

When planning an estate, most parents distribute their assets equally among their children. However, there are many variables to consider in making this decision.

If it's your goal to be fair to each child, it does not necessarily mean leaving assets equally to each child. Sometimes special circumstances need to be taken into consideration. If parents have done lifetime gifting to one child, or have helped a child financially, but have not done that with their other children, they may or may not want the lifetime gift deducted from that child’s share.

Sometimes a parent may have loaned a child a sizable amount of money, and they want the child to sign a promissory note, promising to pay back the amount borrowed. This way, if the debt isn't paid back before the parents die, it likely will be payable to the parent's estate and come out of that child's share. A properly crafted estate plan does not need to be amended each time parents lend or gift money to a child. Instead, an estate plan that keeps a record of the gift or loan should be sufficient.

Sometimes parents also wish to honor a child who has shown a great amount of assistance in caring for them in their later years. Some children will choose to have their parents live with them in order to help them more. Often, a parent may choose to express their gratitude to the child by leaving him or her a larger inheritance or a specific item or piece of property.

For a child with lower income and/or a larger family to support, a parent may want to leave a larger share to that child, or even grandchildren, that need it the most. For that child who has worked the family farm for many years at a reduced level of compensation, parents will often leave them a larger portion of their assets, sometimes even the whole farm. If other assets exist, such as life insurance or investment accounts, parents will often leave those assets to the other children.

Parents with a child that has special needs may choose to leave an unequal share to that child in a special needs trust, because that child may have different needs than the others. Perhaps the child with special needs could not benefit much from an inheritance, and the parents choose to leave that child less than the others.

Each family is unique, with different dynamics. The failure to properly plan usually creates unintended consequences, which is why one of the greatest gifts you can leave your family is a well-written plan incorporating your wishes and goals.

Call or email our office to make an appointment to discuss your options.

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