In matters of estate planning, you want to make sure that you are leaving a loving legacy that reflects good intentions and a positive message.
However, there are many ways that parents can leave the wrong message, especially if their final wishes cause resentment among children. That makes it crucial to ask what is an appropriate division of property among multiple children?
Equal or equitable?
The first option is splitting your assets equally among your children, which means each person gets the same amount. Many parents take this route as it seems the simplest and fairest. However, depending on your relationships and family dynamics, an equal division may not be the best option for your heirs or your legacy.
Every family is unique, and different family members have different needs, play different roles and possess different talents and capabilities. To account for these matters, you may want to plan for an “equitable” distribution. “Equitable” does not necessarily mean “equal.” For example, you may want to leave more assets to a child who cared for you in your old age, or you may want to include a particularly business-savvy child in your business succession plan while not including a child who isn’t as interested in business. This kind of decision-making may sound simple enough, but in the absence of proper documentation and clarification among heirs, an “equitable” distribution could also lead to disputes between siblings during the probate process.
Both options — equal distribution and equitable distribution — have advantages and disadvantages, so it’s important to take time to evaluate what works best for your family’s situation. Before you make a final decision, consider taking these three steps:
- Talk with your kids — It can be difficult to discuss estate planning with your children, but an honest conversation may set expectations for them and allow you to explain your thought process. It also allows them to voice their opinions before you structure your plan.
- Think creatively — There may be ways of distributing certain items of property that some heirs will appreciate more than others. There may also be ways of offsetting the higher value of certain assets by considering the sentimental value of particular items. Also, is it possible for your heirs to share any of the property, such as a vacation home?
- Explain yourself thoughtfully — If you decide to follow a certain path, write a detailed letter explaining your thoughts and what your intentions were. That can give your children insight into why you chose the path you did.
Once you finish those steps, don’t forget to decide what ultimately works best for you. After all, it’s your estate plan and your legacy.