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A Guide to Dividing Your Estate Unequally

Dividing your estate among family can be complex and sometimes difficult. Nevertheless, not having a will may lead to more complications and is ultimately irresponsible. Quite often, equally dividing assets among children makes the most sense. However, giving each child an identical inheritance might not be the best decision in some cases. 


Considering the distinctions between leaving an equal inheritance, in which each child receives an identical amount, and an equitable inheritance, in which each child receives what is appropriate, provided the circumstances, may help you decide what’s best for you and your family. Your choices might affect sibling harmony and whether your intentions are executed as you intended. 



Couple making estate planning decisions

Equal Distribution

When each of your children has similar lifestyle needs, received similar support in the past from their parents or other family members, and is mentally and emotionally responsible, it may make sense for each child to receive an equal inheritance. 

If your legacy involves real estate and other tangible assets, you must determine a dollar amount and decide what makes the most sense to leave for each child. Location may also be a deciding factor in whether or not a child receives a home, for example. If one lives nearby and has always enjoyed that house, it could make the most sense to leave it to them. Any existing differences in the values of properties could be left in cash or other assets.

 

Less pleasantly, you may leave an equal inheritance to your children to avoid any costs of conflict, both emotionally and financially. The best way to decide who receives what may be to weigh the likelihood of a child involving litigation in the estate. If that happens, your assets may also end up differently than you originally intended. 


Leaving Varying Amounts 

Equally, distributing your assets to your children may not always be the best option or feel right. For example, one of your children may be acting as your caregiver and you feel they should be rewarded for their time and efforts. Alternatively, one child may have received more throughout their lifetime than another - whether it was their wedding, grad school, or a down payment on a house. In this case, it may be advisable to leave an equal inheritance to your other children and a smaller amount to the child you previously gifted money to. This would fall in the equitable, not equal guideline of distribution. 


If you have a child who cannot care for themselves, you may leave a portion of your estate to provide for that child’s care through a special needs trust. A disabled child may need support to meet living expenses and medical needs that their siblings are likely to understand. 


You may consider leaving different amounts to your children in several circumstances. With a blended family, you may have one child who can expect to receive support from another parent; perhaps you run a family business, and one child owns a larger share than others; alternatively, you may have a financially irresponsible child or simply one who can’t be trusted with an inheritance. 


Regardless of the division of assets, it’s always important to communicate your intentions to everyone involved so that your requests are clear and there are no surprises. 


How to Protect Your Estate

By leaving unequal amounts to your children, you put yourself at a higher risk of them being unhappy or unsettled with the decision. There are a few options available to you to minimize the chances of one of your children contesting your will in court and their chances of winning if they do. 


First, a non-contestability clause states within your will that any inheritor who takes your will to court forfeits any bequests. For the clause to be effective, your child has to have something to lose and you’ll need to leave them enough that they likely have more to gain by accepting the outcome than by going to court.


This may not be your most favorable option, but it may mean the best chance of keeping your will intact. This type of clause varies by state, so it’s important to check your state’s laws before considering this route. 

Other ways to avoid challenges with your will include: 

  • Having your doctor as a witness when you sign your will to invalidate claims of lack of capacity. 

  • Excluding each of your children from the will-writing process to invalidate claims of undue influence. 

  • Discussing your will with each child to explain your reasoning and avoid surprises.


If a lawsuit arises regarding your estate, it will most likely end in a costly settlement that will undoubtedly alter your estate plan. Funds will likely end up in a different place or with a different person than you had originally proposed. 


The Bottom Line

Regardless of how and to whom you leave your inheritance, it’s important to remember that it is your wealth, and you have the right to do with it what you choose. That being said, whether you leave an equal or equitable inheritance to your children should depend on your existing relationship and their lifestyles. If perceived inequality occurs because of uneven distribution of your assets, the likelihood of legal mediation increases, and it’s up to you to decide how significant that risk may be. 

 

Planning your estate carefully may not be easy, but it is imperative. It’s also important to meet with a knowledgeable and trusted advisor should you have questions or concerns about creating your will and the options available to you. 



Invest In a Life You Love,

Donovan Carson - founder of Carson Capital



 

Donovan-carson-founder-carson-capital

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