How To Divide Your Estate Fairly Between Your Children
When writing a will or trust, many people are worried about showing favoritism to one or more of their children. Instead, they want to divide their estate fairly so that each child feels appreciated. Nevertheless, sometimes dividing an estate fairly between your children is complicated. In that situation, you are advised to meet with an estate planning attorney.
One common misconception is that you must divide your estate equally for the distribution to be “fair.” To be sure, an equal division will sometimes be the sensible thing to do. Often, dividing everything equally tamps down on disputes after you are gone, so you can avoid a will contest.
For example, you might have two children. Each is responsible and about the same age. The bulk of your assets can be converted easily into cash, like stock or bonds. In this situation, dividing everything in half might be the best strategy. You can instruct your personal representative to sell all of your assets and then make a 50-50 distribution between your two children.
However, estate planning is often not that simple.
Are All Assets Equal?
Cash is easy to divide equally, and anything that can be converted into cash can also be divided equally. But what about real estate? If you are leaving real estate, it might be difficult for your child to sell it and therefore realize the value of the property. In the interim, they will be responsible for property taxes until they can unload the property. Also property values fluctuate, so you think you are leaving someone $200,000 in property when it might ultimately only be worth $150,000.
If you are leaving a family business, then you might want to leave the business to one child who has been most involved, otherwise the business could flounder. However, this business might be worth more than the other assets you have to leave to your other children, so an equal distribution might prove difficult.
Does One Child Need More Assets?
A common example where one child needs special treatment is a disabled child. Disabled children frequently need more assets so that they can live comfortably, and you need to leave them assets in an appropriate vehicle such as a special needs trust.
Ideally, one of your other children will help take care of your disabled child, but you cannot count on that. Also, you should not leave assets to able-bodied children in the hopes that they will spend the money on your disabled child. They might waste those assets, or lose them in bankruptcy.
As you sit down to draft your estate plan, also consider these other situations that might affect how you divide your estate:
- Do you intend to leave assets to a step-child? If so, they might also inherit from their other parent, so you could leave them fewer assets in your will or trust.
- Have you made gifts during your lifetime? If so, you might want to take those into account when deciding how to divide property.
- Are there any sentimental gifts that one child wants? If so, you can either give them away while living or make a specific bequest in your will.
By thinking about these issues ahead of time, you can divide your estate in a manner that you are comfortable with.
How an Estate Planning Lawyer Can Help
An estate planning attorney can listen to your concerns and identify ways to make a fair distribution between your children possible. For example, you might have other assets like life insurance or retirement accounts that will even things up. Or you might draft a buy-sell agreement for a family business that will clarify who has control of the business after you are gone. At the Millhorn Elder Law Planning Group in Florida, we will listen to your concerns and use our knowledge to help you make a fair division of your estate between your children.