When Equal Is Not Equitable: How To Give One Child Less

Parents often go to great lengths to make sure they treat their children equally, not only during their lifetime but also by leaving them an equal share of their estate upon their death.

But in some situations, an equal distribution may not seem fair. For example, suppose one of your children is a doctor with a very successful practice, while your other child is an elementary school teacher, who earns significantly less. Perhaps one of your children is disabled and will never be able to provide financially for himself.  Or you have a close relationship with one child, while the other child is estranged. In situations such as these, an unequal distribution may appear to be more equitable.

But how can you divide your estate unequally without inviting resentment, hurt feelings and perhaps a legal challenge. Those are questions Rachel Emma Silverman discusses in a recent article in the Wall Street Journal.  Silverman article suggests the following:

• Be open about your plans. If you decide to make an unequal distribution of your estate, tell your family members your plan before your death and make sure everyone understands it. If you choose not to have this conversation during your life, write a letter or make a video explaining why you’ve made an unequal distribution. The letter or video can be attached to your will and shared upon your death.
• Make it clear the disparity is not an indication of greater affection for one child. Right or wrong, many heirs “equate love and money”. Therefore, if you intend to make an unequal gift for financial reasons, Silverman’s article suggests explicitly stating that unequal distribution was made because of that child’s greater financial need, as opposed to greater affection for him or her. If you want to make an even distribution in your Will, but still want to support less financially-secure children, you could make annual exclusion gifts of up to $17,000 per year, or pay for things such as health care or tuition during your lifetime.  The article also suggests splitting a portion of your estate equally and then leaving your remaining assets in a trust that can distribute funds for your children’s emergency needs.

Although not mentioned in the article, it is also possible to divide your probate estate equally, while making an unequal distribution of your non-probate assets, such as insurance policies or IRAs. Those assets pass by beneficiary designation rather than through your will and would not be subject to a will contest.

The article suggests a few other things parents can do to avoid a legal challenge:

• Execute serial wills over a period of months or years that modifies an insignificant aspect of their estate plan, but retains their primary distribution scheme. This can be used to bolster the intent of the testator.
• Specify that any conflict be resolved by mediation rather than litigation.
• Add a no-contest clause in the will which disinherits any heirs to challenge the validity of the will.

You can read the full article titled Wills: How to Give One Child Less by following the link.