Dividing your estate among children can be a tough affair. In many cases, the obvious option—an equal distribution of assets among children—is the best choice. However, in other families, giving each child the same inheritance may not make sense.
As any estate planning attorney will tell you, there is a distinction between leaving an equal legacy, in which each child receives the same amount, and an equitable inheritance, in which each child receives what is fair based on their circumstances.
So, when is it appropriate to leave the same legacy to each of your children, and when does a different arrangement make more sense? And how will each decision affect sibling harmony and whether your wishes be carried out as intended?
Let’s find out.
When to give equal amounts
If there are three children, an equitable division clearly means that each will receive one-third of the residual inheritance after both parents have passed away.
It makes sense for each child to get the same inheritance when each child has similar needs and is similarly situated in life, each child has received similar support in the past from their parents, and each child is mentally and emotionally capable and responsible.
For example, if all of your children have graduated from college (with you paying their tuition) and no longer rely on you for financial support, if no child has a disability or serious illness, and if they have all demonstrated financial responsibility, it is logical to divide your assets evenly.
If your bequests include real estate and other tangible assets, you must calculate the value of each asset and decide what is best to leave to each kid.
Even if you believe one or more of your children do not deserve what they are getting, leaving an equal amount can assist in preventing the emotional and financial expenses associated with conflict.
When to offer different amounts
Sometimes giving each child an equal share of the pie may not always feel right. For example, if one of your children is caring for you, you may want to reward them or compensate for lost time and wages.
Perhaps you’ve given one child significantly more money than you’ve given another, such as a substantial amount for a wedding, graduate school, or a down payment on a home.
In this case, instead of leaving your two children with equal inheritances, you may leave less to the child you previously gifted money and more to the child you did not. This distribution adheres to the equitable, not equal, rule.
If you have a child who is unable to care for themselves, you should leave the majority of your inheritance to fund that child’s care through a special needs trust.
A disabled child may require economic support to cover basic living expenditures as well as funding for continuing medical requirements.
Siblings will likely understand the circumstances and will not be insulted by receiving less money, but it is still a good idea to inform them of your plans so that there are no shocks after your death.
Can a child sue for more?
Yes, a child can sue for more, especially when they feel they have been shortchanged.
If you choose not to split your assets evenly among your children, be aware that you are putting your plans and your children in danger of a lawsuit.
What is the significance of this risk, and how likely is it that the outcome will be a different asset division than you desired? Children can sue to contest a will, but with proper estate planning, you can help limit the risks.
The first stage is to create your will with the help of an estate planning attorney while you are of sound mind and memory and without any undue influence from one of your children.
Undue influence means that one of your other children believes—or thinks it may be proven in court—that you were manipulated while drafting your will.
As a result, that youngster claims, you voiced wants that you would not have made otherwise or that were not truly your desires.
You won’t be able to defend yourself against such a claim, therefore make sure no one can successfully debate it.
Lack of capacity is another way a will can be challenged. This challenge indicates that you didn’t understand what you were doing when you made or amended your will, either due to your age or a physical or mental ailment that has harmed your ability to make sound choices.
A child could potentially claim that your will is invalid due to fraud or because your signing was not witnessed.
How do you protect your wishes?
There are steps you can take to reduce the likelihood of a less-favored child fighting your will in court, as well as the likelihood of that child winning if that happens.
A no-contest clause paired with at least some nominal gift can create a disincentive to challenge. A non-contestability provision is simply text in your will that states that any inheritor who contests your will will forfeit any bequests.
That’s where the nominal present comes in—for the clause to work, your child must have something to lose. You’ll need to give the less-favored youngster enough leeway that they’ll likely benefit more from remaining silent than from appearing in court.
It’s an unpleasant option, to be sure, but it may provide the best chance of keeping your will intact. The enforceability of these clauses differs by state, so consult your state’s laws before contemplating this alternative.
- According to an estate planning lawyer Bowie, other measures to avoid challenges to your will include the following:
- Using a trust to give structure to a youngster who may be unable to manage their inheritance responsibly on their own.
- To disprove accusations of lack of ability, have your doctor witness your will when you sign it.
- Excluding all children from the will-writing process to prevent charges of undue influence.
- Discuss your wishes with each child to avoid surprises and to explain your reasoning.
A case of this nature is most likely to result in a settlement. That settlement will in some way vary your estate plan, because funds will likely end up in a different place or with a different person than you had hoped.