Should I Leave Equal Amounts to All of My Children?–Part One

Part One: What Is Fair?

Dear Mr. Miller:

I have three adult children and am struggling with how to divide my estate.

My oldest daughter has done very well financially and really does not need anything from me. My son has had financial problems most of his adult life, although some are of his own making. My youngest daughter lives nearby and has been the one helping me with medical appointments, errands and things around the house. I do not pay her for any of this.

My Living Trust presently divides everything equally among the three of them. But the older I get, the more I wonder whether equal is really fair. I have thought about leaving more to my youngest daughter because of everything she does for me, perhaps less to my oldest because she is financially secure, and somehow protecting my son from spending his inheritance too quickly.

On the other hand, I do not want my estate plan to cause a fight among my children after I am gone.  Should parents always leave equal amounts to their children?

Trying to Be Fair

Equal and Fair Are Not Necessarily the Same

What Are You Trying to Accomplish?

Recognizing the Child Who Helps You

Protecting a Financially Troubled Child

There Is No One Right Answer

Part 1

Dear Trying to Be Fair:

No. Parents do not necessarily have to leave equal amounts to their children.  But before deciding who should receive more or less, I would start with a different question:  What is important to you about your Living Trust? In other words, what are you trying to accomplish?

Equal and Fair Are Not Necessarily the Same: Dividing an estate equally has an obvious advantage. Everyone understands the formula. Three children means three equal shares.  There is less room for anyone to wonder whether Mom loved one child more or was influenced by the child who happened to be closest to her.  Many parents believe strongly that their children should inherit equally, regardless of their financial circumstances or how much help they have provided.

But equal and fair are not necessarily the same thing. Ultimately, you have to decide what seems right to you, both in your heart and in your mind.  A child who has spent years caring for an aging parent may reasonably deserve some additional recognition. A child with financial difficulties or special needs may require a different approach.  There may be perfectly good reasons for treating children differently.

What Are You Trying to Accomplish? Before changing percentages, I would want to know what result you are trying to achieve.  Are you trying to thank your youngest daughter for the years she has helped you? Provide greater financial security for your son? Protect him from spending an inheritance too quickly? Or simply recognize that your oldest daughter does not need the money?

Those are different objectives, and they may lead to different solutions.  For example, your oldest daughter’s financial success does not necessarily mean you should leave her less. You might feel she has worked hard, made good decisions and deserves to be treated just like her siblings.  On the other hand, you might believe your estate could make a greater difference in the lives of your other children.  Neither conclusion is necessarily wrong. Your estate plan should reflect what you want to accomplish, not a formula you feel obligated to follow.

Recognizing the Child Who Helps You: Your youngest daughter has been helping with medical appointments, errands and other needs without being paid. Perhaps she has been doing this for years.  You may reasonably want to recognize those contributions by leaving her something extra.  But are you trying to compensate her for the services she has provided, or simply express your appreciation? Those are not necessarily the same thing.  Also remember that children who live farther away or provide less assistance are not necessarily less loving. Employment, geography and family responsibilities may limit what they can do.

If you decide to leave your youngest daughter more, make sure that decision reflects what you genuinely want to accomplish.  There is also an important caution when a caregiver child receives a larger inheritance. Her involvement in arranging or participating in the estate-planning process may raise questions later. We will discuss that issue in Part Two.

Protecting a Financially Troubled Child: Your son’s situation raises a different concern.  You mentioned that some of his financial problems have been of his own making. You might decide to leave him less, but would that actually accomplish your objective?  If your concern is that he will quickly spend whatever he inherits, giving him a smaller inheritance may simply mean he spends a smaller amount.

Another possibility is to leave him an equal share but provide that it be held in a continuing trust, with distributions made over time rather than all at once.  Depending upon the circumstances, an appropriately structured annuity providing periodic income might also be considered.  These arrangements have costs, tax considerations and limitations that should be discussed with your estate-planning attorney.

The important point is that equal inheritances do not necessarily have to be distributed in the same manner.  Sometimes the better solution is not to change how much a child receives, but how and when the child receives it.

There Is No One Right Answer: Clients sometimes ask me what most parents do, as though there is a correct answer hidden somewhere in the law.  There isn’t.  Some parents feel strongly that every child should receive the same amount. Others believe fairness means recognizing different needs, contributions and circumstances.

But even if you are comfortable with an unequal distribution, your children may see things differently. And when they receive their inheritances, you will no longer be there to explain your thinking.  That brings us to Part Two: How can you make the decisions you believe are right without unnecessarily creating suspicion, resentment or a family fight after you are gone?

In the meantime, if you are wondering whether your Living Trust still reflects what you want to accomplish for your children, call us at 760-436-8832. We can review your plan and documents, discuss your alternatives and help you make decisions that reflect both your practical concerns and what matters most to you.