Planning For and Executing Inheritances (Part Two)

Early on, we learned the phrase “there’s nothing so unequal as the equal treatment of unequals.” Who has children that are all the same?

Some children have received significant help from parents during their lifetimes while others haven’t. Many parents choose the “forgiveness provision” to address this situation at death, to either “equalize” any gifts made to some children during lifetime with those who did not or, in the alternative, to “forgive” any loans made to children and then make a gift in like amount to each of the other children by inheritance, before the estate is divvied up in equal shares.

Next up is the problem of children who are partially or wholly estranged. Many clients wish to leave them a token amount but there are pitfalls to consider. One who is left considerably less than their siblings will often be angry and upset. They may demand that their siblings disclose what they received and even to pony up their equal share. Not only that, but the burden of telling that estranged child they are getting less and delivering the paltry amount is left to the children who you wish to favor!

In our view, it is sometimes better to leave an estranged child out altogether than to stir up all the issues surrounding an inheritance much smaller than equal.

There are many valid reasons, however, to treat children differently. They may have alcohol or substance abuse issues, learning disabilities or special needs, they may be immature and irresponsible, poor at handling money or a “soft touch” and, finally, they may have a spouse that dominates them and you do not want to see that controlling spouse get your money.

Sometimes parents leave more to the “needy” child, the old adage being that “the tongue always turns to the aching tooth”. If so, other children’s feelings may need to addressed. A letter to be opened after your death, explaining what you did and why, may go a long way towards soothing hurt feelings and avoiding misunderstandings.