I love my job as an estate planning attorney and I am lucky to be in a field that is much more collaborative and less adversarial than other fields of law. However, one area where we see conflict, which often leads to expensive and relationship-destroying litigation, is when siblings fight over their parents’ estate.
I see this most often when there is an unequal division of assets. Clients often ask me if I have recommendations for how to divide an estate. I typically recommend dividing assets equally among siblings when there isn’t a strong justification to do otherwise. It is shocking how sibling rivalry can persist into middle age and even later! No one wants to feel like they aren’t the favorite, especially in the emotionally vulnerable time after a parent has died.
However, I certainly see many situations where an inequitable distribution makes sense. The number one thing to do in these situations is to discuss your estate plans with your children so they aren’t hearing them for the first time after you pass. Here are some situations where I might recommend an inequitable distribution (but only if you plan to communicate it first!).
Special Needs Child
Depending on the size of the estate and the relative financial well-being of the sibling, a special needs child might need more (or less money) in a trust to care for their needs and cover them given they don’t have a job.
Children from Multiple Marriages
If you intend to leave roughly equal amounts to all your children, those from a prior marriage and those from a current marriage, you might need to leave different amounts in a will so that the kids will receive relatively similar sums. For example, if you were to leave half your money to all your children equally and the other half to your spouse, the children from your second marriage would essentially be getting a double portion (once through your estate and then again after their other parent passes). To leave to all children equally, you would likely need to leave a greater portion to the children from your prior marriage. There are alternative ways to accomplish this as well, such as using life insurance for children from a prior marriage versus leaving other assets in the estate to your current spouse.
Caregiver Sacrifices
One of your children has made a substantial timing and/or financial commitment to care for you as you age. Perhaps you want to leave a greater share to this child after she gave up her career or moved in with you. Perhaps she has lived with you for the past 5 years, so you want to make sure she gets to remain in the house. This is a situation where one sibling could claim undue influence (that the sibling who has been caring for mom convinced her to give her a larger share of the estate, the house, etc.) If you want to reduce the chances of damaging the sibling relationship after you are gone, it is so important to explain your plans and reasoning while you still have capacity.
Family Business
Imagine that one of your children is inheriting the family business and the other isn’t. Therefore, it might make sense to give one child the business and the other child a larger share of cash, name the child as a beneficiary of a life insurance policy, or provide the child with other assets to balance the overall inheritance.
Again, the most important thing I have found is to communicate your wishes in advance. You can always bring your family members to your trusts and estate appointments or include them on the phone so we can discuss the plan and how assets will be distributed so their questions can be answered in advance.
Out in the Community
On Tuesday, October 29, Michael will be doing a virtual "Ask the Expert" program on Legal/Financial Planning for the New York City Chapter of the Alzheimer's Association.
During November, Michael will be presenting on Estate and Financial Planning at various school districts throughout the Tri-State area.
Stay tuned to this newsletter or LinkedIn for further details.
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