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Communicate with your kids before leaving unequal assets

When it comes to leaving money to the kids, some parents struggle to reconcile “equal” with “fair.” An equal inheritance treats each child the same, regardless of life situation or special circumstances. On the other hand, sometimes an unequal distribution can seem like the fairest thing to do, given a child’s age, financial wherewithal, or previous track record.

To avoid unpleasant surprises and contentious family squabbles, be transparent about your plans and talk with your children ahead of time. That helps children understand your point of view and gives them an opportunity to share concerns or life issues you may not be aware of.

Imagine, for example, that you intend to leave more to your daughter, the social worker, and less to your son, the small business owner.  Disclosing this plan could encourage your proud son to reveal that business is declining and the operation has far less value than you thought.

Having these difficult conversations ahead of time allows you to adjust for such misunderstandings, before it’s too late. You may find that that your children are sympathetic and accepting of unequal distributions. Alternately, you may change your mind if one child’s sense of hurt and injustice threatens to divide family relationships.

Here’s a partial list of reasons you may choose to allocate an inheritance unequally:

  • A child has special needs and requires long-term financial help.
  • A child struggles with addiction, legal issues, or chronic financial mismanagement (an option here would be to put this child’s gift into a trust to control how he or she accesses it).
  • A child earns more or has a significantly higher standard of living than his or her siblings.
  • A child received sizable financial gifts while you were still alive.
  • A child is younger and will need support for college and other coming-of-age expenses. which you already provided to the elder children.
  • A child has died and you do not wish to distribute your assets to his or her heirs.
  • A child provided caregiving support to you in your old age while others did not.
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