What matters most: equal or fair? Ensuring that adult children all benefit from a share of our assets requires clear thinking—and courageous communication. While it is easy and typical to say each child gets an “equal share,” in reality, sometimes fair turns out to be more important.
Three Points
Whether assets are modest or massive, thoughtfully planning to pass them forward can make a tremendous difference to the next generation. When creating an estate plan though, parents often face dilemmas related to “fair and equal.” Love is likely to be felt equally for all children, but equal distribution of assets is not always what is truly fair. There is nothing in the law that requires assets to be gifted equally to children—in fact, there’s nothing in the law that requires gifting assets to children at all. Nonetheless, most parents are eager to ensure adult children benefit from the financial boost an inheritance provides and want to do “the right thing.” When pondering what exactly this means, attorneys at Weinstein & Randisi suggest considering these three reasons when it may make sense to earmark assets in a way that is fair—even if unequal:
- If one child has significant financial needs, such as ongoing medical expenses or significant educational debts, while the others do not, it may be fair to leave that child a larger share of your estate. Similarly, if all of your children are established in their careers but the youngest is still in college, it may be fair to leave that child more….
- If one child has contributed more to your comfort or care…, it may be perfectly reasonable to leave that child a larger share of your estate….Alternatively, if one child has been estranged from the family and you, you may be entirely justified in excluding them….
- If you have a family business, you may want to involve the child who has been most involved in the business a larger share of your estate through proper succession planning — since that also gives your business a better chance of enduring through the next generation.
When life circumstances lead to estate planning decisions that could be surprising to beneficiaries, it is extra important to make the intentions clear—ensuring that money is not equated with love: “As Aristotle points out…when people who are equal are granted unequal shares — or people who aren’t equal are granted equal shares — ‘quarrels and complaints arise.’” Although it may feel difficult, courageous conversation with adult children about the rationale and details of estate plans is essential. Even when done with the best of intentions and reasons, unexpected decisions can trigger contests to the estate plan. Lingering, unresolved family conflicts are frequently at the roots of messy and painful probate litigation. Toward leaving your family in good shape—financially and emotionally—make sure you understand the basics of wills and trusts and follow these estate planning basics. Estate lawyers remind us that careful planning also requires assembling all the account information and other details your family will need to settle your affairs. Although not a legal document, providing a “letter of instruction” to accompany your will or trust can also be useful.
Importantly, when you make an estate plan, you will designate a loved one, friend or professional to serve as your fiduciary. Choose carefully—and, again, communicate the reasoning for your decision so as to avoid misunderstandings down the road: lack of faith in the appointed fiduciary, such as the executor or trustee, can also pave the path to litigation. Generally, the designated fiduciary is referred to as an executor, trustee, or personal representative, depending on your circumstances and region. Regardless of the specifics of your estate plan, the appointed fiduciary has a legal responsibility to carry out your affairs, in accordance with the intentions set forth in your estate planning documents and the law. Fiduciary bonds, alternatively referred to as estate bonds, can be required as a safeguard for the interests of the estate and beneficiaries.
Learn more about estate bonds right here. At Colonial, a leading national provider of all types of fiduciary bonds, the steps to obtaining estate bonds and all other types of fiduciary bonds are easy: get a quote online, fill out the information, and enter a payment method. Print or e-file the bond from anywhere—even the law office.
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