One of the biggest problems in estate planning is figuring out how to treat children fairly in circumstances when fairly does not necessarily mean equally.
The default estate planning option for people with more than one child is to divide their estates equally between their children. That is the most common thing that is now done in estate planning.
It is easy and simple.
Most of the time it is a fair way to divide a parent’s estate and one that the children accept. That does not always work, however, because as every parent eventually learns, treating children fairly does not always mean treating them equally. That holds true in estate planning.
Adult children can wind up in very different life circumstances for a variety of reasons. For example, if one child became wealthy after receiving a large gift from his parents to start a business, it might not be fair to treat that child the same in an estate plan as another child who went into public interest work.
Figuring out how to divide an estate unequally but fairly between children can be difficult, as the Wills, Trusts & Estates Prof Blog discussed in “Dividing Your Wealth Among Your Children.”
The biggest problem is figuring out how to make the unequal division without causing any of the children to dispute the estate. Trusts are extraordinarily helpful in these situations, since they are much more difficult to challenge.
Parents can create a trust with an independent trustee and give the trustee the power to make distributions to the children based on their circumstances and needs. It is also important that parents who are leaving unequal inheritances for their children talk to the children and let them know the reasons for doing so.
If you want to leave your children unequal inheritances, you need to seek the advice of an experienced estate planning attorney to make sure you do so in a way that your children will think is fair and not seek to challenge.
Reference: Wills, Trusts & Estates Prof Blog (May 5, 2017) “Dividing Your Wealth Among Your Children.”