I have noticed that many clients use the words “equal” and “fair” interchangeably in the discussion around leaving assets (especially to children and grandchildren). Unfortunately, when thinking through the ramifications of equal treatment, it often starts to not look as fair to all takers. One example involves the family business where one of the client’s two children works. The client decides to leave equal shares of the family business to both children, yet only one of the two kids “sweated it out” with mom experiencing the ups and downs of the growing business while the other sibling had a steady, salaried office job. In this scenario, passing equal shares to both of them may not feel fair to the child who worked her whole professional career with mom. This element of fairness may be considered when dividing liquid assets, too. Consider the situation where a parent pays for college or makes a down payment for the first house of the oldest child and passes away before the second child goes to college and gets her down payment. Should the assets passing to the two children be in equal amounts or should an equalizing distribution be drafted into the Will to provide for educational expenses or a down payment? There’s no right answer other than what the Testator wants, but it is important to consider such issues carefully to ensure that there are no unintended consequences.
Estate Planning Myth #5: Equal is Fair
Erika Stein Rosenhagen / April 22, 2014
One thought on “Estate Planning Myth #5: Equal is Fair”
Comments are closed.