When parents create their estate plan, one of the decisions that must be made is how to divide their estate among their children. For some, the answer is simple – every child gets an equal share; for others the situation is more complicated and leaving equal shares is not the desired choice. Sometimes the relationship with one child has soured and the parents no longer feel that they are part of the child’s life; or perhaps a parent may believe that one child is more financially well-off than another who may have chosen a less financially lucrative career path. It might seem logical to give unequal shares in some situations, but be careful: treating children differently has far reaching consequences, more than just financial. Providing different beneficial interests to your children, or disinheriting a child completely, can have an emotional impact on the child and the family as a whole.
The decision to leave unequal shares is unique to every family, and there are a few situations where it might make sense to do so:
One child has been the primary caregiver to one or both parents
Often times in families, there is one child who takes on the role as the primary caretaker. Perhaps the child has given up his or her own career for several years to provide needed care. This may warrant giving more to the caretaker child to recognize the sacrifice and to make up for the lost wages and/or lost time with their own children.
One child may have a physical or mental disability
A child’s disability may be another reason for a disproportionate inheritance. An adult child who has been diagnosed with a debilitating physical or mental illness may face a life-long need for continued support. Be careful, though: many disabled children receive benefits from government programs through Medicaid and Social Security Supplemental Security Income. If a child receives an inheritance directly, it may disrupt those benefits. In these types of situations, working with an estate planning attorney experienced in special needs planning is critical.
There is a significant age difference in your children
Another situation where unequal distributions may be warranted is when there is a wide age difference among your children. Younger children will need care longer than grown children. This is especially true if the oldest has already been provided a full education before younger children have received the same benefit.
There is a family business
Family businesses often present unique challenges to parents. One child may want to join the family business and the other children will not. Instead of making them all equal owners in the business, it may be more appropriate to leave the business to the one who has shown an interest and compensate the others with other assets and/or life insurance.
Whatever parents decide in how to distribute their estate, the most important thing is to make sure their desires are communicated. This is especially important in situations where children will be receiving unequal share or different assets. Often, a family meeting with all children is a good mechanism to share your decisions. For help starting this type of conversation, download our e-book “Life Conversations with Your Adult Children”. Starting the conversation can be uncomfortable to start, but it might avoid hurt feelings and difficult situations after you pass.
