The ability to choose what your children receive when they pass away is an important one, especially in a country where a growing number of families choose not to reflect the traditional model of a family. To avoid the manner in which many probate codes handle the inheritance of children and offspring in nontraditional families, it is often up to the parents themselves to be the harbingers of equity, ensuring that their children get what is rightfully theirs – according to their own metrics.
But it’s therein that an interesting problem arises. When writing a will, you have the power to determine who gets what. But how do you determine that? Do you evenly split your fortune and divide it among your children and surviving kin without other, deeper, more specific considerations? Or do you assign specific items and assets to different children, as per the sentimentality of each asset, and then split the non-sentimental property equally?
Do you give the same to a child who has chosen to be a struggling artist as you would to a child who has garnered financial success? What if one of your children suffers from a chronic condition and requires lifelong medical support? Do you split the estate in order to give to each according to their needs? And what issues can you expect when choosing to split an estate not in terms of equality, but equity?
Equal vs. Equitable Inheritance
Equality versus equity is a very long conversation, but in the context of inheritance, it’s an important one to have. To split something equally is to ensure that each person receives an equal share – for three children, each receives a third of their portion of the estate, in financial terms.
How exactly that might be handled depends heavily on the situation, and there’s more to evaluating the contents of an estate than simply giving each item a financial value. Something that might not be worth very much to one child could mean the world to the other and being sensitive towards such connections is critical.
Equity describes when each person is given a portion of the estate corresponding to their needs. If one child struggles financially due to their mental or physical condition, then they would need a larger share of the inheritance in order to achieve the same level of contentment that another child might reach without a debilitating medical issue.
However, trying to accurately measure what each child needs (or deserves) is incredibly difficult, and can often lead to emotional backlash. Being open and honest about who gets what and why can help prevent further drama down the line, as well as give you a better idea of how to divide the estate.
When to Split Equally; When to Divide Equitably
An equal split is often the best choice when all children share the same means and are in similar positions in life. While your children are not and never will be identical, and some might be happier or more successful than others, it’s still wisest to divide an estate equally when it’s clear that your children each share the same means to do with their lives as they see fit.
But when there’s a clear difference in means or ability between your children, then dividing equitably makes more sense. It also makes more sense given other factors: for example, if only one of your children is married and you contributed heavily to their wedding, then it makes sense that you might want to favor the others more in order to ensure everyone gets an equal share overall.
The same goes for other instances of where you might have gifted exceptionally more to one child than another, like helping with loan payments, buying them a car, or in instances where one child has taken over the family business or is in a much better position to live a financially-comfortable life, while their siblings aren’t.
If your child cannot care for themselves or their money, then you will need more than a will. A special needs trust can help you devote a portion of your estate to ensuring that your child is financially assisted after your death.
Your Children Can Sue (Within Reason)
If your children do not agree with how you divided the estate and continue to feel betrayed even after your death, there are cases wherein they may effectively challenge your will. One way a child can sue you for how you handled their inheritance is by claiming that a sibling or other party had undue influence over the will-writing process, thereby effectively currying favor for themselves in a way that would land them a greater share of the estate.
You can avoid this problem entirely by excluding your family from the will-writing process and ensuring that everyone gets the same information about what you plan to do with your wealth. Excluding your children from helping you write your will and completely cutting your family off from knowing anything about your plans are two very separate things.
In fact, it’s a good idea to discuss your plans with your family and prepare your children for how you plan to divide your estate before you pass away. Not only will this help you directly address issues that might otherwise later serve to tear the family apart in the wake of your passing, but it also gives your children more time to come to terms with parts of the estate planning process that they might not necessarily agree with.
Ensuring a Smooth Inheritance Process
The bottom line is that if you plan to divide your estate among your children in such a way that they each receive what you feel is fair, rather than a strictly equal inheritance amount, there will always be a potential clash of opinions. Fairness is completely subjective, and what you feel your children deserve might not necessarily match up with what they think.
Doing what you can to try and avoid further drama by helping them make peace with your decisions is important, not just for the estate, but for your family. Otherwise making sure the will cannot be feasibly contested is also an option. At the end of the day, what your children really want doesn’t matter to the court – what matters is that your estate plan accurately reflects what you wanted in life, as you are free to distribute your estate as you see fit.
The first step should be to consider whether your choices are final, and whether you want to discuss them with your children. It’s alright to be worried that one of your children might convince you to treat them a little better than the others, but chances are that you are already harboring bias you might not have even known you have.