Fair or Equal?

10/06/2011

When it comes to estate planning, almost every parent wants to be fair to their children.  Usually, parents do not want to show favoritism, they want to give each child the same advantages, and eventually they want to leave each child a fair and equal inheritance.

But every parent also knows that there are times when equal is not always fair.  In fact, there are a number of different reasons why parents may want to give seemingly unequal monetary distributions to their children because that is what they think is fair, although it is clearly not equal.

For example, many parents want to support children who need more financial help.  Others may want to repay children who have provided important support or caregiving.  If there is a family business that some children are involved in and others are not, how should assets be divided?  Some parents already may have helped one child considerably more than another during his or her lifetime, such as paying for a pricey graduate-school education or providing money for a down payment for a house. Other parents may be reluctant to reward a particularly difficult or problematic child.

There is absolutely nothing wrong with choosing to leave more to one child (and therefore less to another).  After all, it is your estate plan and you have to do what you believe is fair.  However, you should be aware that when children are not treated equally problems can arise.  Usually, this happens because children are caught by surprise and don’t understand the reasons for their parents’ seeming favoritism.  This can lead to sibling disputes and contests in court after a parent dies.

There are things that can be done to avoid hurt feelings and expensive court proceedings.  The first, and perhaps best, strategy is to talk to your children about it ahead of time. Telling your children yourself what your estate plan says gives you the opportunity to explain your decision in a sensitive and loving manner.

If you still worry that your decision might be contested, there are a number of precautions you can take to help ensure your planning documents will stand up, including taking steps to prove your mental capacity is sound, including a no-contest clause in your will, or more. Which method, if any, you employ will depend completely on your situation.