Uneven distribution of assets is common in estate planning.
Choosing how to distribute assets to heirs can cause anxiety.
Parents often struggle with the difference between an “equal” and a “fair” inheritance.
Should everyone receive the same amount?
According to a recent The News-Enterprise “Distribution of estate can become a tricky matter,” parents fear choosing an uneven distribution of assets to their children.
No one family is the same.
Children in the same family sit around the same dinner table, share the same living space, and likely attend the same grammar, middle, and high school.
However, each of the children is different as night and day.
What works for one family may not work for the next.
Relational dynamics can influence estate planning.
Some children may be estranged from their parents while others have sacrificed to provide care to their aging loved ones.
Should these children receive the same inheritance?
In this situation, some parents prefer to provide an uneven distribution of assets.
They may want to compensate the caregiver for years of sacrifice.
Although an uneven distribution of assets may make sense, it can require more careful estate planning.
Those receiving less may choose to challenge the last will and testament or revocable trust distributions.
If you are wanting to leave a greater inheritance to one child, you should avoid simply adding a codicil or amending your estate plan?
This can trigger a legal challenge to the distributions.
Disgruntled parties often point to how they were supposed to received an inheritance or a greater amount before the document was updated.
This can lead to costly court battles.
When you create new documents, you should be specific regarding bequests.
For example, if you want to include grandchildren but bypass your child, you need to explain this in your estate plan.
If you choose to provide an unequal distribution of assets, you could have a conversation with your family before you die or write a letter to explain your reasoning and demonstrate your intent.
If you provided a loan to a child from his or her inheritance before you die, things can get tricky.
You may not be able to ensure your that your estate plan is updated to reflect each repayment.
Is there a better option?
You could leave each beneficiary the exact amount he or she should receive but include a provision for repayment of loans based on the inheritance.
Often this is accomplished with a promissory note that becomes an asset of the estate itself.
Working with an experienced estate planning attorney is always a wise choice, but it is even more important if you choose unequal distribution of assets.
Reference: The News-Enterprise (Sep. 8, 2020) “Distribution of estate can become a tricky matter”