Determining how to fairly divide an estate between two or more children can be an incredibly difficult decision for any parent. We tell clients not to equate being fair with treating beneficiaries equally. 

"But what if I think one of my children simply deserves to receive less of my assets than the others? How do I explain that without causing a huge argument?"

We often meet parents who've delayed creating an estate plan because they were stressed over how to be "fair" to each of their kids. Again, fair does not mean equal.

One Child Borrowed Money

Suppose Mom loaned money to her son for a down payment on a house, but he has thus far been unable to pay it back? Should he receive an equal share of Mom's estate in comparison to his siblings if she dies before the loan is repaid? Many clients would say no. 

To address this, Mom can include provisions in her plan addressing the loan and how it affects the child's inheritance if he hasn't repaid the loan. Our firm has encountered this family loan scenario in the past. To simply matters after death, we recommend parents consider including language in the estate plan saying they did not intend to charge the child interest on the loan.

One Child is a Bad Seed

What if a daughter has a history of poor decisions that resulted in criminal convictions, enormous debt, or substance abuse? Should she receive the same amount of her parents' estate as her law-abiding, financially stable, and sober siblings? How will the other kids feel at seeing their "bad seed" sister receive an equal share? 

If Mom or Dad are holding out hope this daughter will eventually "grow up," then they can change the plan after that happens. In the meantime, they can protect the estate by addressing in their plan what concerns prompted them to provide this child a smaller inheritance. 

If the parents created a trust, they can stipulate the daughter must show evidence of stability and sobriety before she receives an inheritance in part or in full. Depending on the instructions, a trust can also require she achieve certain personal, educational, or professional milestones before she receives her share.

One Child is More Able

What if one of your children is physically or mentally disabled while the other is healthy and fully functioning? In knowing the child with a disability faces a certain future of dependency on the support from others, they decide to tip the financial scales in that child's favor. They may be worried how the other child will react to the news.

An estate planning attorney can help create a special needs trust to protect the child with a disability's future and help clients determine how to be fair with other beneficiaries. The trust can be funded by assets passed down from the parents. Emotionally, this scenario is really tough because it means parents face leaving non-disabled children less of an inheritance simply because they're healthier.

In our experience, these clients usually decide that an unequal division is actually more "fair" to the disabled child than a 50/50 split.

One Child Struggled

On the flip side, what if one of your children did more to support the family than the other kids did? This might mean the youngest daughter worked alongside Dad in the family business, perhaps without being paid for her time and efforts. Or maybe she paid for her college education whereas her siblings relied on Mom and Dad to foot the bill. 

What if she performed as main caregiver for Mom and Dad during their senior years? She cleaned, cooked, watched over the bills, and generally performed as their main source of support.

With such a daughter as this, any parent would be well justified in deciding she should receive a larger portion of the assets due to her hard work and sacrifice for the family's benefit. However, we suggest taking the time to explain this reasoning to the other kids.

Informing the Kids

While they're certainly not obligated to disclose the content of their estate plan, we recommend clients at least consider informing their children why and how they decided to divide up the assets. A family meeting (something our firm can help coordinate) can diffuse potential battles that could be ignited by a child only finding out after the parents are deceased that he is receiving a lesser share.

For those clients that simply can't bring themselves to discuss their estate plans with their children for fear of upsetting them, we recommend they include a letter with their will explaining their reasons behind the unequal division. The letter should compassionately address any possible resentments, questions, or disappointments the children may have.

It's really important for clients to determine what their own definition of "fair" is when they decide what to leave their loved ones, especially if equal portions aren't an appropriate solution. Being "fair" might even mean deciding that one or more of the children won't receive anything. 

To learn more about common estate planning issues, check out our free guide, Estate Planning Pitfalls: The 12 Most Common Threats to Your Estate & Your Family's Future, or to discuss your estate planning concerns, please call our office at 919-443-3035 or use our contact form.

Jackie Bedard
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Attorney, Author, and Founder of Carolina Family Estate Planning