Here at AgingOptions we have the opportunity to work with a wide variety of clients in the area of estate planning. It’s interesting how frequently we’ll be in the middle of a discussion concerning how a client wants to dispose of his or her assets after death, only to have the client look us in the eye and ask – sometimes sheepishly – “Do I have to divide everything among my children precisely equally?”
Because this question comes up a lot, we wanted to revisit the issue by reviewing a column that appeared last year in the “Wealth Matters” section of the New York Times. The title really caught our attention, because it immediately calls to mind the issue we just cited: “How a Will Treating Children Differently Can Still Be Fair.” If you’ve ever wrestled with the notion of dividing your estate unequally among your heirs, we encourage you to read this helpful article to see what the New York Times had to say about this potentially touchy – even explosive – issue.
“Children crave equal attention from their parents,” the article by Times reporter Paul Sullivan began. “So when it comes to inheritance, which can seem like a final accounting of that love, anything but an equal split can be tough to grasp.” Sullivan then went on to ask, “Is there ever a time when inheritance should be uneven? And if so, can uneven still be fair? The answer to both questions is yes.” But, as the Times piece emphasized, good, clear, timely communication is essential to avoid hurt feelings, family strain and even painful litigation.
If you stop and think about it, the article points out, good parents raising kids seldom treat each child precisely equally. That’s because each child’s needs and circumstances vary. Instead the effective parents tend to emphasize treating each child with fairness and equity. So when it comes time to plan your estate, it’s appropriate for you as a parent to consider each adult child individually, gauging their life circumstances and making the decision to distribute your assets unevenly based on need and other, more emotionally-driven factors. But if you decide to take this course of action, you may need to prepare for some pushback from the offspring who think they were treated unfairly.
The New York Times quoted an anonymous woman married to a well-to-do man in the tech industry. On the surface this woman appeared to be much better off than her siblings, so when her mother began preparing to divide her estate she planned to give this daughter a much smaller share. Unbeknownst to the mother, however, the daughter was subject to a pre-nuptial agreement barring her from controlling her husband’s assets. She was actually far more vulnerable than her mother realized. “Just because I married someone with money doesn’t mean I should get cut out,” the daughter in the New York Times article said.
In another case of an uneven bequest, a mother planned to favor her daughter, a school teacher with a modest income, over her son, a well-off doctor. But the doctor felt cheated, as though he had done all he could to please his parents only to be “disinherited.” In the end, after lengthy and productive conversation, the daughter received a larger share, but the son wasn’t left out entirely. Above all the sibling connection was maintained through effective communication and not severed, as all too often happens.
We know of one local case where an ailing mother made her two daughters – who did not get along – co-executors of her estate. The mom did this to avoid favoring one over the other, but her desire to treat her daughters “equally” ended up causing far more family friction than if the mother had chosen the more mature and responsible daughter and let her take the lead in executing the estate. In this case the mom’s hopes to avoid causing offense actually backfired.
There are several other instances of unequal estate distribution cited in the New York Times article involving circumstances that can get much more complicated. In some cases the unequal split is accidental and unplanned, as when one child inherits a gift with a tax liability, or when there are children from multiple marriages, or when a family business is involved. In these cases we strongly urge you to sit down with professional counsel, because these issues left unresolved can tear families apart for generations to come. Here in our office we see the tragic results of this lack of planning all too often. We will be happy to meet with you at any time at a carefully planned family conference where a wide range of issues including inheritance can be laid out and reviewed to avoid future painful surprises.
So the bottom line is communication. Leaving your estate unequally to your children may indeed cause potential problems, but as the New York Times put it, “All these problems can be minimized, if not fixed, with a conversation.” Paul Sullivan in the Times added this warning: “The downsides of not getting this right are huge.”
As with so many aspects of retirement, the key is planning – but not just any type of so-called planning. At AgingOptions we take a uniquely comprehensive approach to retirement planning that we call LifePlanning. Part of the LifePlanning process involves good, honest, timely communication with your family, something with which we can definitely assist you. Having a plan in place is important, but if your loved ones have no idea what your wishes are, or why you made the choices you made, conflict and bitterness can result. Besides good family communication, your LifePlan will help you make wise housing choices, prepare all your legal documents, secure necessary health insurance and protect your assets in your retirement years. The result will be a happy, secure, rewarding retirement, and a family who will be grateful to you both now and after you’ve gone.
Why not start investigating the LifePlanning approach to retirement by attending a free LifePlanning Seminar? You can click here for dates, times and simple online registration, or call our office for assistance. Bring your retirement questions – and see if you don’t agree that LifePlanning is the most thorough, balanced approach to retirement planning that you’ve ever seen. It will be our pleasure to help you as you journey toward the retirement you’ve always dreamed of.
(originally reported at www.nytimes.com)