Why an 'Equal' Inheritance for All the Kids Doesn't Always Work: 4 Scenarios to Consider
These are some of the situations in which it'd be appropriate for one or more of your children to inherit differently than their siblings.
Every estate planner has conversations with their clients about how children should inherit. While most people assume that children should inherit equally, many clients contemplate treating children differently for various reasons.
Here are some situations where an equal inheritance might not be appropriate, and the pros and cons of treating children differently.
Scenario No. 1: A caretaker child/child lives with the parent
Many times, one child primarily helps an aging parent. This could include helping with medical appointments, coordinating care with various healthcare providers, being heavily involved in end-of-life care, paying bills and providing companion care.
From just $107.88 $24.99 for Kiplinger Personal Finance
Become a smarter, better informed investor. Subscribe from just $107.88 $24.99, plus get up to 4 Special Issues
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Oftentimes, this care is provided by a child who lives with or is close to the parent.
If a child lives with the parent, it may be appropriate to leave the home to that child to the exclusion of the others. This could either be done by simply giving the home to the child or leaving the home to a trust for the child for their lifetime.
Similarly, a parent may wish to give the caregiver child a larger percentage of the inheritance in recognition of the additional help provided.
Scenario No. 2: A child has special needs
If a parent has been the primary caregiver for a special needs child, then the estate plan should take this into account to ensure that the child will be properly taken care of after the parent’s death.
Depending upon available government aid, this can often mean a special needs trust or supplemental needs trust for the child, with more or less than an equal share of the estate being held by the trust.
In this scenario, the other children can often be more understanding. In practice, many times the siblings are involved in the plan for caring for their grown sibling when the parents are no longer able.
Scenario No. 3: A child has mental health or other issues
If a child has issues, such as mental illness, substance abuse, divorce or creditors, or if the child is bad with money, it may not be appropriate to leave an outright inheritance, or any inheritance, to that child.
The same is true for an estranged child. The use of trusts to provide some (protective) support for such a child may be appropriate.
Occasionally, disinheriting a child is the choice some families make.
Scenario No. 4: A child has more money than their siblings
Sometimes a wealthy child may tell a parent to treat them differently and give more to other siblings, or a parent may feel that a very wealthy child does not “need” the inheritance.
Wealth can change over a lifetime, so this should be well thought out.
What is right for you?
While these can all be sensible reasons to treat children differently, they are often difficult choices for parents to make. Many parents feel that they are morally obligated to treat their children equally; otherwise, after death, the children will harbor resentment and/or sibling rivalries will resurface, irreparably damaging those relationships.
It is important to be completely open and honest with your estate planning attorney. Everyone has family issues. While these conversations can be difficult, it’s best to give your estate planner all of the family information so these choices can be considered carefully.
Tracy A. Craig is a partner and chair of Seder & Chandler's Trusts and Estates Group. She focuses her practice on estate planning, estate administration, prenuptial agreements, guardianships and conservatorships, elder law and charitable giving.
Emily Parker Beekman is a Wealth Planning Strategist at Corient in Boston. She works with clients and their advisers to develop and implement their estate planning, wealth transfer and charitable planning strategies.
Related Content
- How to Leave Different Amounts to Adult Children Without Causing a Rift
- Preparing for an Inheritance: Don't Let Your Blessing Become a Curse
- Want Your Kids to Inherit? You Need an Asset Protection Plan
- How to Handle Estate Planning for Multigenerational Living Arrangements
- Estate Planning Amid Family Estrangement: Limiting the Fallout
