When creating your estate plan, you decide that you do not want to split things into thirds for your three children.
After all, your oldest daughter is quite well off. She became a surgeon and then married another surgeon she met at work. Together, they make over $500,000 every year. They have paid off their school debt and their home, so they never have to think about money, much less make a budget.
You wish all of your children were so lucky, but the reality is that they’re not. One of them has a low-paying dead-end job, and the other keeps bouncing from one job to the next. Only one of them has a college degree.
Your plan is to leave less to your daughter and more to your other children, on the grounds that they need the money and your daughter does not. Is that wise?
Problems with unequal division
Most experts agree that it is not a good idea to split money up in an unequal fashion. Even so, it is more common than many people realize. Some reports indicate that about 35 percent of parents — roughly a a third — have plans to split up their estates unequally.
The problem is that siblings often fight over estates; they start a full 44 percent of will disputes, for instance. In 32 percent of these disputes, these children note that the reason for the case is an unequal distribution of assets. On top of that, a total of 46 percent of siblings who start disputes claim “they did not get what they were promised.” Some even accused other siblings of taking those assets that their parents had promised to them.
Leaving more to a child who needs it more is one of the most common reasons for an unequal split, but that does not mean it’s a wise idea. Is your daughter going to feel outraged that she got less than her siblings? Is she going to feel “punished” for getting a college degree and a high-paying job?
After all, these are things she worked for. She expected her parents to be proud, not to cut her out of the will.
Talking to the children
One thing you may want to try, if you’re set on leaving unequal bequests, is talking to your children in advance. As you can see, many children start disputes because they assumed they would get something and then it went to someone else. Misconceptions about your intentions could put the kids in court. If they know what you’re planning, perhaps they’ll get along.
Do not draft an estate plan without really thinking about all of the options that you have and the ramifications of the plan you choose.