Though it’s customary to divide assets equally among children, there is no law saying that parents must do so. In fact, parents do not have to leave anything to their children. Still, when making a will, it’s common to instruct that everything should be divided equally among heirs. What if life circumstances sway parents to decide otherwise? Read on for guidance from estate planning professionals.
Decide Carefully, Communicate Clearly
When it comes to familial harmony, unspoken assumptions, plans or expectations about asset distribution are at the root of most post-death conflicts, so whatever the intentions or hopes for assets are, it’s always best to speak about them while time is on our side. As Philip Galanes wisely observes in The New York Times, it’s key for adult children to understand the rationale behind estate plans, especially if a decision may be perceived as unusual or unfair: “To children — even adult children — gifts from parents are often received as symbols of love. And that’s why transparency is important here: to ensure that even if your bequests…vary in amount, none of the children misinterpret your gifts as statements of greater or lesser love.”
Even as parents love all children equally, when it comes to estate planning, sometimes ideas surface related to who may need a boost the most based on life circumstances, age, or sheer good fortune. Consider for example this question Galanes shares from a father pondering a change to his will:
I have two sons from my first marriage and a third son from a later relationship. The boys are very close. I love them equally, and I want to create an estate plan that’s fair to all of them. My current will divides my estate into three equal shares for each of the boys. But the mother of my two older sons is financially comfortable, and they stand to receive a decent inheritance from her. My youngest son’s mother is not well off, and he will probably receive little from her estate. Should I revise my will to increase the amount that I leave my youngest son to balance out what the older boys receive — in total — from their mother and me? I want all of them to be comfortable when I’m gone, but I worry that my older sons will be hurt if I leave more to my youngest son.
Hmm! How would you respond? Fundamentally, estate planning is about making, and then updating decisions, and often those decisions are not that easy. Perhaps that’s why so many families put off estate planning altogether, which only leaves a greater chance for conflict behind. Noting that asset designations “are your call entirely,” and underscoring the importance of discussing decisions with loved ones so as to curtail unpleasant surprise and hurt later, Galanes offers this perspective on dividing assets among three adult children, given the above circumstances:
For better or worse — and probably for better — you are not creating an estate plan with your ex-wife. And while you believe that she is “financially comfortable” now, that may change depending on her health and other circumstances as she ages. (The same can be said of you.) I suggest focusing on what you actually control here: namely, your own finances.I would divide your estate equally among your three sons. Now, if your first wife were a billionaire, say, or if your sons’ means were wildly different from one another’s, that might be a reason to consider a different allocation of bequests. And, notwithstanding my advice, that is still your call entirely! But no matter how you decide to proceed, take the time to explain to your sons how your estate will work. It’s important that they understand your reasoning and have a chance to ask questions.
Fair But Unequal?
Attorneys at Weinstein & Randisi acknowledge that sometimes circumstances lead parents to earmark assets in a way that they feel is fair, even if unequal, and offer these examples: “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 ….” When making estate planning decisions, just remember that communicating your intentions is the best way to prevent painful probate litigation down the road. Though not a replacement for conversation, estate planning attorneys also note that it may be helpful to include a letter of instruction to accompany your will or trust.
Another aspect of estate planning that helps ensure arrangements ultimately proceed smoothly, is the careful selection of the fiduciary. When a will anchors an estate plan, this designee is usually referred to as the executor; when a trust is involved, the fiduciary is referred to as a trustee. In both cases, the chosen fiduciary has a legal responsibility to the estate and its beneficiaries. Given these significant responsibilities, a type of bond, referred to as a fiduciary bond or an estate bond, is often required. Essentially, estate bonds serve as a guarantee that duties will be carried out in accordance with the law and in the best interests of the estate and its beneficiaries. As a leading national provider of estate, and all kinds of fiduciary bonds, Colonial Surety Company makes it easy and speedy to obtain them. Simply: get a quote online, fill out the information, and enter a payment method. Print or e-file the bond from anywhere.
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