This question raises some significant issues about fairness and about how to handle estate planning—particularly the importance of communicating with your heirs about your wishes and intentions. When it comes to family and money, even the most generous of impulses can be misinterpreted.
For instance, I felt for a friend of mine who was left out of his mother’s will. It’s not that he had a bad relationship with his mother, but he was financially far better off than his two sisters. His mother’s estate was small and she divided it between her daughters, who really needed the money. My friend understood this, and didn’t resent his sisters, yet he was wounded. He wished that his mother had discussed her decision with him before she died, so he could have been forewarned—and reassured that she loved him.
In another case a friend’s father gave her less than her sibling because she was a stay-at-home mom. He justified this by saying that she was already taken care of by her husband. But to my friend it felt like her father was making a judgment about her life choice.
The more I hear stories like these, the more I believe that it makes a lot of sense for parents to treat their children equally. While it’s completely understandable to consider providing extra assistance to a child with fewer resources (and that could be the best decision, depending on the circumstances), or for a child with special needs, as I discuss in Question 50, it’s important to proceed with care.
First, understand that your children may easily perceive their inheritance as a symbol for your love. Even when they’re adults, childhood insecurities can linger. A perceived slight could trigger resentment that could last for decades.
Also, remember that things can (and do) change. One child may be earning a lot more now, but it’s impossible to accurately predict the future. By the time your estate is distributed, your kids’ fortunes may have altered. Just look at the financial turmoil and turnarounds of the past few years!
If you do decide to divide your estate unequally, it’s generally best to explain your plan to all of your children now. Be up front about your concerns for all of them, both financial and emotional. Hopefully, they’ll be honest in their response so that you can have a good discussion.
Smart Move: To even things out, you can consider an estate plan that provides more money for the kids who need it, and gives family heirlooms or other nonfinancial assets to those who don’t. Or you may want to give annual gifts to those who may need more financial help now (or perhaps to their children, such as contributions to a 529 college savings plan).
Of course, it’s possible that you won’t be able to make everyone happy. Ultimately, it’s your money and your decision. The main thing is to be fair. Think carefully before you decide to give one of the kids more money than another. After all, the last thing you want to do is to foster resentment that could live on for years after you’ve gone.
Talk to an Expert: No matter how big or small your estate, I recommend working with an estate planning attorney to make sure your will and other documents are in good shape. If you have substantial wealth, you may also need to think about ways to minimize estate or inheritance taxes. See Question 39.
Appointing a family member to manage your assets can make sense, but it can also cause problems. Before you choose one of your children, give some thought to the following questions:
Caution: Appointing two or more people can invite trouble. When there are only two beneficiaries—for instance, a brother and sister who get along well—it could work fine. But when there are multiple beneficiaries, it’s probably best to have one person or entity making the decisions and handling the details.
Smart Move: Once you make a decision, talk to your children. Be open about your estate plan, what they can expect, and why you’ve chosen a specific person. They’ll be happy to know that you trust all of them with this information—and also trust that they’ll honor your wishes without dissention.
Part V: Estate Planning, Question 40