One of the most common questions asked during the estate planning process is, “Should I divide my estate equally between my heirs?” While it is a straightforward question, the answer depends on your circumstances, concerns, and wishes.
In some families, it may not make sense to give each of your children an equal inheritance. Estate planning attorneys frequently point out the differences between leaving an equal inheritance, where each child receives the same amount, and an equitable inheritance, where each child receives what you deem to be fair, given their life circumstances. While dividing things equally between your heirs may seem like the easiest solution, there are several factors you should consider.
Assigning Equal Amounts
Equal distribution can help deter family conflict over fairness or favoritism. Let’s say you have four children. An equal split means that each child will get exactly one-fourth of the remaining estate after both parents have passed away. This scenario could make sense for you and your family if each child has similar needs, similar life situations, has received similar or equal financial support from you in the past, and if each child is mentally and emotionally responsible.
The most logical choice may be dividing your assets equally if you paid all of your children’s college tuition without the assistance of student loans, they no longer rely on you financially, and they have shown that they are financially responsible.
Another thing to consider is that leaving an equal inheritance can help your heirs avoid the cost of conflict, both emotionally and financially, even if you don’t feel one or more of your children deserves an equal share. Overall, equal distribution can avoid family conflict over fairness or favoritism.
There is always a risk that an heir could drag an estate through litigation if they feel they aren’t getting their fair share. A legal battle is draining emotionally, physically, and financially for your family and your estate. Some of your assets could end up in a different place than you wished, or worse, paying attorneys to argue for your heirs in court. It’s also important to know that identical distribution doesn’t always mean equitable, especially when one or more children have been favored financially in the past or if some are in more challenging financial predicaments.
Assigning Different Amounts
There are situations where leaving each child an equal amount of your estate doesn’t feel right.
If one child acts as your caregiver and you want to reward them for their devotion or replace any wages they lost while caring for you, that is a solid reason to want to leave them more. On the other hand, you may have provided additional financial support to one of your children during your lifetime. You may have given a substantial amount to one or more of your children for a large wedding, to pay for graduate school, or given them money for a down payment on their first home, while your other child may not have been given financial assistance. These are all things you can take into consideration when deciding how you should distribute your estate.
In a world where divorce and blended families are prevalent, you may decide to leave different amounts to stepchildren than you do to biological children, or vice-versa. You may also contemplate leaving unequal amounts to heirs if you run a family business and one child owns a larger share than another, or if you have a financially irresponsible child and have given extra assistance throughout their life.
Ways To Protect Your Wishes
There are ways you can minimize the chances of your heirs contesting your will in court and protect your wishes after you’re gone.
- A non-contestability clause is a provision you can use in your will that threatens to redistribute inheritances if any heirs contest the will. This is a helpful stipulation that will often deter a less-favored child or heir from challenging a will in court and minimizing their chances of winning if they bring a case to court. This may not be the most pleasant solution, but it could be your best chance of keeping your will intact. How these clauses are enforced varies from state to state, so be sure to check your state’s laws or discuss this option with your estate attorney.
- Use a trust to provide structure for your heirs who may be unable to manage an inheritance responsibly.
- You can ask your physician to be a witness when you sign your will to invalidate any claims that you have a lack of mental capacity.
- Have a discussion with your children about your will and estate plan. By doing so, you have a chance to explain your reasoning and for your heirs to avoid unpleasant surprises.
- Remove all children from the will-writing and estate planning process to bypass unnecessary emotional influence or leverage.
The most important thing to remember during the estate planning process is that the money and assets involved are yours alone. You have the right to divide up the inheritance any way you choose. Planning your estate purposefully is no easy task, but it is essential to safeguard your wishes after you die.
This content is developed from sources believed to be providing accurate information, and provided by Spectrum Management Group. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security.