Every estate planning attorney has conversations with clients about how adult children should inherit. While most assume siblings should inherit equally, equality is not always appropriate in many situations. There are many situations where an equal inheritance might be unfair, says a recent article, “How Should Your Children Inherit? 4 Scenarios Where ‘Equal’ Is Not Appropriate,” from Kiplinger.
The Caretaker Child Lives With the Parent. Taking care of paying bills, coordinating health care appointments, driving the parent to appointments, and being involved with end-of-life care is a lot of responsibility. When one of the children lives with the parent and has taken on most, if not all, of the responsibilities, it may be fair to treat the child differently than siblings who are not involved with the parent’s care. It may be reasonable to leave this child in the family home or leave the house to a trust for the child for their lifetime. The parent may wish to leave the caretaking child a more significant portion of the inheritance to recognize their additional help.
A Special Needs Child. Most government benefits are needs-based. If the parent has been the primary caregiver for a special needs child, the estate plan must consider this to ensure the child will be adequately cared for after the parents die or are unable to care for the child. Depending on the child’s government benefits, parents need to create a Special Needs Trust or Supplemental Needs Trust. A Special Needs Trust could receive more or less than an inheritance equal to the amount of the estate the child would have inherited.
Most government benefits are means-tested. To remain eligible, recipients may not have more than a certain amount of personal assets. The siblings often know they will care for the family member with special needs when the parents can no longer provide care and welcome the help of an elder law estate planning attorney to plan for their sibling’s future.
An Adult Child With Problems. It’s usually not a good idea to leave an equal portion of an inheritance to an adult child with a mental illness, substance abuse, a divorce, or a life-long history of making bad choices. Putting the money into a trust with a non-family member serving as a trustee and strict directions for when and how much money the trustee may distribute could be a better option. In some cases, disinheriting a child is the unpleasant but only realistic alternative.
Wealth Disparities Among the Siblings. When one child has been financially successful and another struggles, it may be fair to bequeath an inheritance that is not necessarily equal. However, wealth can change over a lifetime, so regularly review the estate plan and wealth distribution.
How To Decide What Will Work For Your Family? Every family is different, and every family has different dynamics. Have open and honest discussions with your estate planning attorney, so they can help you plan for your family’s situation. If possible, the same frank discussion should take place with adult children, so no one is surprised at a time when they will be grieving a loss.
Reference: Kiplinger (Dec. 18, 2022) “How Should Your Children Inherit? 4 Scenarios Where ‘Equal’ Is Not Appropriate”
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