Equal and fair are not always the same thing in an estate plan
When planning your estate, you might assume that dividing assets equally among your children or other beneficiaries is the best approach. After all, treating everyone the same seems like the fairest solution. However, experienced estate planners understand that equal division doesn't always result in fair outcomes. Let's explore why this distinction matters and how it might affect your estate planning decisions.
Consider a family cabin that's been in your family for generations. Your daughter has worked alongside you for 20 years, investing her time and energy into maintaining and improving the property, while your son pursued a successful career in Seattle. Would dividing the farm's value equally between them truly be fair to your daughter's years of dedication?
This scenario illustrates why many Idaho families opt for equitable (fair) rather than equal distribution in their estate plans. Fair division takes into account various factors that simple mathematical division doesn't consider:
1) Prior Financial Support — Perhaps you helped one child through medical school while another received minimal educational support. A fair distribution might adjust inheritances to account for these previous investments.
2) Caregiver Contributions — If one of your children served or will serve as your primary caregiver during illness or aging, you might want to recognize their sacrifice and dedication through your estate plan.
3) Business Continuation — When family businesses are involved, leaving control to the child who's actively involved in operations often makes more sense than splitting ownership equally among all children.
4) Special Needs — If you have a child with disabilities or ongoing medical needs, they might require a larger portion of your estate to ensure their long-term care and security. And on the other hand, this child may already have most of their needs provided for by one or more programs making it unwise to leave an equal slice of the estate pie to a beneficiary who will not have as much opportunity to utilize it.
Choosing fair over equal distribution requires careful planning and clear communication. It is undeniable that a client increases the chances that there will be disputes after their death if the division of assets is not numerically equal. And some clients have decided that avoiding conflict is their highest objective. Every family is a unique situation. Here are some key steps to consider:
Explain Your Reasoning to Your Attorney — Clearly explain to your estate planning professional why you've chosen an unequal distribution. This can help prevent misunderstandings and potential challenges to your will or trust.
Consider Alternative Assets — If you want to achieve fairness while keeping certain assets whole (like a family business), consider equalizing inheritances through other means, such as life insurance policies, retirement, or investment accounts.
Update Regularly — Life circumstances change. Asset values change. Regular reviews of your estate plan ensure your asset distribution strategy continues to align with your family's evolving situation.
Communicate Early — Have open discussions with your children about your estate planning decisions. While these conversations might be uncomfortable, they can prevent surprises and family conflicts after your passing. This is by far my most important tip. My years of experience have shown me that putting everyone in a position to know how things will be almost always takes the steam out of any potential disputes after your death.
Remember, your estate plan should reflect your values and your family's unique circumstances. While equal division might seem like the easiest choice, and for some will certainly be the right choice, taking time to consider what's truly fair can lead to better outcomes for you and your loved ones.
Working with an experienced Idaho estate planning attorney can help you navigate these complex decisions and implement them effectively. They can help you understand all available options and create a plan that achieves your goals while minimizing potential family conflicts.
The key is to focus on your family's specific situation rather than following a one-size-fits-all approach. Whether you choose equal or equitable distribution, your decision should be guided by your family's needs, your values, and your vision for your legacy.
My law firm is currently offering free telephonic, electronic, or in-person consultations concerning creating or reviewing estate planning documents.
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Robert J. Green is an Elder Law, Trust, Estate, & Guardianship Attorney and the owner of Kootenai Law Group, PLLC in Coeur d’Alene. If you have questions about estate planning, probates, wills, trusts, powers of attorney, guardianships, Medicaid planning, or VA Benefit planning, contact Kootenai Law at 208-765-6555, Info@KootenaiLaw.com, or visit www.KootenaiLaw.com.
This has been presented as general information and not as legal advice. Do not engage in legal decision-making without the advice of a competent attorney after discussion of your specific circumstances.