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The pluses and minuses of unequal wills

| Mar 3, 2021 | Estate Planning |

Most parents go out of their way to treat their children equally. This tendency carries over into estate planning, so it is typical to split everything equally for the children. But some question whether equal amounts are equitable. Sometimes the parents see a need where one child deserves or needs more or less than the others.

For example, a child had a modest hourly job and spent a lot of time caring for their elderly parents. He or she helped out by doing chores around the home or doing their grocery shopping. There may also be two other siblings who live comfortably and have no money concerns as they prepare for retirement.

An unbalanced approach to fair

According to a 2018 Merrill Lynch Wealth Management survey, two-thirds of parents with children 55 and older thought that the children did not need equal amounts. The survey also found that one-quarter of these parents also thought adult children with children of their own should get more than those who did not have children. A parent may also want to leave more money to a child with special needs or a disability.

A trigger for sibling rivalry?

The downside to this approach is that it can lead to resentment, destroyed relationships or even a court battle. The son or daughter who most benefitted could be accused of exerting undue influence or worse.

Conversely, some see the unequal amount as a blessing – it maintains strong sibling relations while perhaps avoiding the unpleasant situation where the higher earners will have to support the lower income sibling later after the parents die.

Early inheritance for some

It is also common that some children require more financial support than others. Some started a failed business venture that a parent invested in. Others may have had a much more (or less) expensive education than the others. The parents can regard these expenses as an early inheritance that they later balance by awarding unequal amounts in the will.

Parents will need to explain their thinking

Many families do not know what is in the parents’ estate plan, or the children were told something that was no longer true. To head off the strife, the parents can talk to all the children individually or in a group and outline their reasons, such as the cost of the heir’s education or other financial support. Many people leave a written letter behind to explain why they set it up the way that they did.

Like it or not, inheritances are often seen as a symbol of their parents’ love for them, so it often best to make clear that the amount of money is not tied to the amount of love. Even financially successful children want to know that their parents loved them.