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Senior Spectrum Newspaper
December 2018
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Senior Spectrum Publications

Fair Does Not Always Mean Equal:
by Gerald M. Dorn, J.D., EPLS, AEP
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Avoiding Conflict in Inheritances

Gerald Dorn
Gerald Dorn

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.

If, however, you do want to provide a more balanced inheritance, it can still be helpful to explain the reasons for choosing to treat everyone equally. Many times, parents will have one child that needs or expects more financial support, but those same parents don’t want to punish the other successful children by diminishing their inheritance. An explanation might make clear that the individual circumstances of each child was not a deciding factor in ensuring that each child enjoyed an equal share of the family wealth.

Ultimately, the decisions are yours. Because each family is different, only you can make the choice as to what works best for your family. Either way, your estate planning attorney can provide guidance to meet your goals and wishes for your children after you are gone.

Another very important decision in avoiding family arguments is appointing the right person to be responsible for handling your estate’s affairs after your death. Naming your children as equal Co-trustee or Co-Personal Representatives might exacerbate the family fight. Sometimes, it is more problematic to have “too many cooks in the kitchen” when it comes to making decisions in administering your estate. However, in some other families, choosing one child as the sole Trustee or Executor might lead to more resentment that the parents “trusted” or “liked” one child better than the others. There is no clear answer, and every family will want to consider this appointment very carefully.

Having open discussions with your family about who will be responsible for handing these administrative matters will help everyone understand the process. Many times, nowadays, we find parents would rather leave their children out of these difficult decisions altogether to avoid bitterness. You may appoint an independent fiduciary to handle the estate administration in a professional and efficient manner. You should work with your estate planning attorney to discuss the pros and cons of your options to avoid problems arising after your death.

Lastly, if you anticipate a challenge to your estate plan, your estate planning attorney can discuss including a “no contest” clause as a way of decreasing litigation risk to your plan!

Luke Welmerink practices primarily in the areas of estate, tax, and asset protection planning. Prior to joining the firm, Mr. Welmerink gained valuable experience working in finance, accounting, and tax planning matters.

The law firm of Anderson, Dorn & Rader, Ltd. is devoted exclusively to estate planning and estate and trust administration. For more information or to attend an upcoming seminar, contact us at (775) 823-WILL (9455) or visit us online at www.wealthcounselors.com.