Can Your Estate be Divided Unequally and Still be “Fair”?

A recent estate column in the Wealth Matters section of the New York Times caught our attention.  The article asks, “Is there ever a time when inheritance should be uneven?  And if so, can uneven still be fair?  The answer to both questions is yes.”  But, good, clear, timely communication is essential to avoid hurt feelings, family strain and even painful litigation.

When raising children, good parents seldom treat each child precisely equally.  That’s because each child’s needs and circumstances vary.  Instead good parents tend to emphasize treating each child with fairness and equity.  So when it comes to planning your estate, it may be natural for you as a parent to want to consider each adult child individually, gauging their life circumstances and making the decision to distribute your assets unevenly.  But if you decide to take this course of action, you may need to prepare for some push-back from the child who thinks he or she was treated unfairly.

The New York Times quotes an anonymous woman married to a well-to-do man in the tech industry.  On the surface this woman appeared to be much better off than her siblings, so when her mother began preparing to divide her estate she planned to give this daughter a much smaller share.  Unbeknownst to the mother, however, the daughter was subject to a pre-nuptial agreement barring her from controlling her husband’s assets.  She was actually far more vulnerable than her mother realized.  “Just because I married someone with money doesn’t mean I should get cut out,” the daughter in the New York Times article said.

In another case of an uneven bequest, a mother planned to favor her daughter, a school teacher with a modest income, over her son, a well-off doctor.  But the doctor felt cheated, as though he had done all he could to please his parents only to be “disinherited.”  In the end, after lengthy and productive conversation, the daughter received a larger share, but the son wasn’t left out entirely.  Above all the sibling connection was maintained and not jeopardized.

There are many other instances of unequal estate distribution.  In some cases the unequal split is unintentional, as when one child inherits a gift with a tax liability, or when there are children from multiple marriages, or when a family business is involved.

The bottom line is planning and communication with your family.  Leaving your estate unequally to your children may be the proper thing to do, but if it’s not done properly, your family could be torn apart.

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