When Equal Isn’t Always Fair

When planning an estate, many parents believe that it is best to distribute their assets equally among their children.  However, if the end goal is achieving fairness, then equal is not always the best way to go.  Sometimes special circumstances must be taken into consideration.

If parents have done lifetime gifting to one child and not another, they may or may not want to take that into consideration when planning.  Some parents may want the lifetime gift to be reflected in their estate plan as an extra if the child needed help.  If this is the case, nothing needs to be done differently in the estate plan, and assets can be inherited equally.  Contrastingly, those parents that want to be completely equal should do some additional planning.  They may want the child they helped to sign a promissory note, promising to pay back the amount borrowed.  Thus, if the debt is not repaid, it can be payable to the parent’s estate and come out of that child’s share.  This way, the estate plan does not need to be altered each time parents lend money to a child or a child makes payments.  Another option would allow for parents to do matching lifetime gifts to other children. 

Moreover, if a child cares for an aging parent, that parent may choose to compensate the child with a larger inheritance.  If there is a family business a child is involved in, a larger inheritance may compensate the child for the amount of work and time contributed that may not have been recognized. 

See Carissa Giebel, Estate Planning: Is Equal Always the Way to Go? Post Crescent, May 2, 2015.