Avoiding Conflict in Inheritances
Let’s face it, even in the closest knit families, money and assets can still create problems. For example, resentment can show up when one sibling has seen greater financial and career success than his or her siblings. Sometimes, clients try to “balance” this inequity in their estate plan, which can cause further friction in the future.
What do you do when you’re estranged from one of your children? How do you balance your distributions when one of your children has five children of their own, whereas another of your children has chosen not to have any children at all? Are you obligated to leave an additional cash gift to your son to match the money that you gave your daughter as part of the down payment for her home?
Clearly, “fair” does not always mean “equal.”
If you have decided to leave unequal inheritances for any reason, there are things you can do to prevent hurt feelings, anger, any legal challenges after you’ve passed. The best way to avoid future problems is to discuss your plan, and your reasons, while you’re alive.
If you do choose to memorialize your reasons, it’s important to be honest, but also recognize that your letter may be shared during a time that your loved ones are still grieving. While it sounds simple, many of the more successful efforts include more than a simple explanation; instead, they include a more heartfelt justification.
For instance, you could say, quite simply, “Your father and I paid for your college education, so we wanted to set aside the same amount of cash for your brother when he decides to buy a home.” While this is an honest justification for leaving an unequal inheritance, a more detailed explanation could clarify, “Your father and I were so proud of you as we watched you receive your college degree. It was one of our proudest moments and we knew it was one of your proudest accomplishments. Because of that, we wanted to be sure your younger brother would have an opportunity to experience the same level of pride in a different accomplishment. While he opted not to attend college, he chose to start a family. As a result, he has not had the opportunity to purchase his first home and has dreamed of providing a better place for his family. We know you will understand the immense pride that comes with being a homeowner and because of that, we know you will also understand why we wanted to play a role in that by making sure he has the funds for a down payment.”
Often, these heartfelt explanations can remind adult children of what really matters in life.