In New York, parents working through their estate planning may struggle with determining a fair inheritance for each child, especially if they have a complex family situation or assets that warrant an unequal inheritance between siblings. The following scenarios illustrate when unequal inheritance can make sense.
Each child’s financial needs
One of the primary reasons parents give unequal inheritances is to help a child or children who are struggling financially. Some parents feel they would rather give their assets to a child who needs more help than one with plenty of financial resources. Alternatively, parents may leave less money to a child they have supported financially during life.
Similarly, if you have a child with special needs, you may want to place a significant portion of your assets into a trust to pay out funds for the remainder of their life so that they are properly cared for – despite the fact that this will leave less for your other children.
Alternatively, sometimes a child has compromised their lifestyle to care for a parent, such as working only part-time or giving up their job. In this situation, you may want to compensate the caregiver child for this sacrifice by increasing their share of an inheritance.
Managing expectations
In some situations, an unequal inheritance can trigger many conflicting emotions between siblings, with some siblings feeling that parental favoritism has survived beyond the grave. Discussing your intentions with your children so that they have realistic expectations about what inheritance they will receive can be an effective way to avoid litigation after you have passed.
To that end, by explaining your estate plan to your children while you’re still alive, and sharing the honest reasons behind your decisions, can help ease this process. If necessary, include professionals who can help your children understand any tax implications and liabilities that might come with their inheritance, as well as other details of your estate plan.
Consider putting your explanation in a handwritten letter if an in-person conversation is difficult. This step can even be used – in some circumstances – to defend your will in court if one sibling contests it on grounds of “undue influence” by another sibling.
For many, estate planning means treating their children fairly. However, fair does not always mean equal, and an unequal inheritance structure might make more sense for your family.
