Any good parent strives to love
and care for all their children (and grandchildren) equally, while trying their best to
avoid favoritism.
When strategizing your estate plan it seems intuitive to do the same, to take the straightforward route and give an equal share to each child. After all, you may be thinking you don't want to play favorites, right? And in many family situations, equal division of inheritance is the best approach.
But there is a difference between
"equal" and "equitable." There are instances where, in the name
of equity, it might be worth considering giving unequal shares.
Here are a few situations where giving unequal shares may be the most equitable thing to do:
- Having a child with special medical needs who would rely on the extra financial support.
- Providing more funds for children who are planning to go to college, vs. those who aren't.
- Rewarding a family member who was more attentive during your lifetime, perhaps a loyal caretaker who deserves extra as a gesture of appreciation.
- Limiting the share for a child with gambling or substance abuse issues or a history of poor money-management.
- Disinheriting a child who is estranged from you.
- Giving a smaller share to an adult child who has been more successful on their own and doesn't need (or want) a large inheritance, and thereby giving more to others who do need it.
- Reducing the share for a family member who owes you money, such as through a loan or business venture.
Give it some thought: Perhaps it's equitable to give more money to a loved one who needs and deserves it more and would appreciate it. Perhaps it's equitable to give less to someone who has not been as much a part of your life, or who has money issues.
The key point to remember when dividing your estate is that it's your money and you get to do with it as you see fit. Just keep in mind that taking the equitable-but-unequal approach to your estate plan carries some risks. There may be children who won't be happy to discover that they received less than (or none of) what they feel was their rightful share of your estate. They may be jealous that someone else received more. An equity over equality plan can give rise to family drama, and possibly a legal challenge (contest) of your Will.
You are in the best position to know your family's values and their
dynamics. Deciding whether to divide your estate equally among your children,
or to tip the scales in favor of some children over others, is not an easy
task. Talking candidly with your children about your estate plan now may help smooth out the road ahead. But how you choose to give is your decision to make, and there are no wrong answers.