As any parent would tell you, deciding whether to divide your estate equally or equitably is hard, but not having a plan is definitely a lot harder for your loved ones to navigate after you’re gone.
Dividing the Estate was a play about a Texas family who’s having hard times amid the oil price drop in 1987. The youngest daughter and her family are deep in debt, and visit their 85-year-old mother. This prompts everyone else in the family to come too. Mary Jo, wants to divide the estate while mom’s still alive to cover her debts.
Mom doesn’t want to divide the estate while she’s alive, and the family quickly dives into a feud, with various members taking different sides in the story. It’s an impressive look at how an estate and wealth might wreck a family.
But surely, there’s a correct way to decide whether you want to leave every child in your family an inheritance that’s equal—or if you want to leave your children what they need, or an equitable inheritance?
When To Assign Equal Amounts
For example, if you have three children and you want an equal split, then the inheritance is split three equal ways and each child receives one-third of the remaining estate. This solution may work if your children have similar needs and you don’t feel that one child requires more financial assistance than the other.
An example of when your children are all in the same stage of life:
Your children have gone to college and you helped pay for all of their college tuition, meaning they do not have student loans and debt. Or if none of them have disabilities or serious illnesses, and work jobs with similar pay-range. This kind of situation shows none of your children need money or the house more than any of the others. So you can divide up the estate based on what you know about your children.
And of course, some parents choose to leave an equal inheritance because they simply don’t want to see conflict from their children over who gets what.
When To Assign Different Amounts
We’ve seen situations where leaving an equal amount to each child isn’t the best route for their family situation. For example, if one child is your caregiver, you may want to reward them for their hard work and devotion, to make up for the time that they could not work a full-time job.
Or, in another instance, one child has already received a lot of money from you throughout their lifetime—perhaps you paid for their wedding, grad school, and a down payment on their first house. But your other child hasn’t gone through those life experiences yet and you want to make sure they’re covered when they get to that time in their lives. Leaving a greater inheritance will provide them more security when they reach that stage.
Another great instance of when equitable makes more sense is if one child has a disability and cannot take care of themselves. If this is the case, you might place your estate into a special needs trust, then your child that needs extra care can receive that care without winding up in a situation where they’re not cared for.
Different amounts may also make sense if your family is blended, and there are children who would receive support from another parent that’s not tied to your estate.
And If You Need Help…
If you need help to set up your equitable or equal estate distribution, reach out for more information from Carolina Family Estate Planning. We can provide you with a comprehensive estate plan in North Carolina. Call our office at 919-335-7426 to discuss the next steps, fill out our online form and we’ll call you.