It’s said that there are two things that are certain: death and taxes. With respect to the former, it’s important to plan for what will happen to your money when you pass on. That day might be a long time from now, and you might not have any kids at this time. Regardless, it’s a topic that at some time or another will find its way on the minds of many people. With kids later in life, it might even generate conflicting emotions for people in terms of how to divide up assets.
OK, it may seem cold and unemotional to think of ourselves as economic assets that will eventually be cashed in and allocated to different people. However, the reality is that we won’t live forever. And when we do leave, and emotions are running high with family, it’s possible that amidst the sadness there could be worries over who gets what. I certainly think that’s unfortunate, but it happens.
My question is this: from the perspective of someone drawing up a will, would you ever leave more for one kid versus another?
I know people who have had these issues, as I discussed in a prior post on siblings dividing an inheritance. They were very civilized, and looking back, I’m impressed at how my friend in particular (the one I keep in touch with) ultimately moved on from the whole ordeal. Now, with question I’m asking here, I’m looking at dividing assets for children from the perspective of a parent.
What got me thinking about this from this different vantage point was an article in the WSJ on how to give less to one kid in a will. Admittedly, it’s a concept that in principle went against the grain for me at first. I believe in fairness between kids, and looking out for their best interests equally. After all, each child is important and should be treasured. Kids that feel less loved than a sibling- even if adult kids – can be hurt deeply, whether or not they admit it. Clearly, it can be a hot button issue.
So, my original thought was that things should be divided equally. Simple as that, right? No need to complicate things or be subjective about it. Fairness is in equality.
Well, thinking about it some more, I think it’s not really that simple. Kids can grow up and end up having very different situations on a variety of dimensions. Examples include:
- Profession – one could be in a lucrative field, another in a modest-paying one, despite both working hard
- Spouse – one could be married to a high earner, another to a low earner
- Marriage – one could be happily married, and the other could be perpetually single or have been through a tough divorce
- Ability – one could simply be more talented than another
- Health – one could be in much better health than another
- Kids – one of your own kids could have 3 kids of his/her own and the other just 1 kid, for example
- Luck – one could have been lucky in life, while the other has simply has some unlucky situation happen
These are all examples of how kids, as they grow up into adult kids, can take divergent paths from their siblings. Note that I’m not talking about differences in basic work ethic, financial responsibility, or integrity.
It’s clear that among siblings, some can end up with much better financial lives than others. Think about your own situation compared to any siblings you might have, or what you see in other families.
Considering all these factors, I now think of equality in a more holistic way.
Meaning, I would consider leaving assets for kids in a way that’s not an exactly equal distribution of what I’d ultimately have. It would be influenced to some degree by true need. Again, hopefully this won’t come into play for a long, long time. When it does, I’d try to pay close attention to the kids’ individual situations and plan accordingly.
The key thing is to be honest, and to make sure that kids don’t get lazy in any way and fall back on any potential for an inheritance. Easier said than done, perhaps. We’ll see, many years from now:)
Not everyone would agree with my philosophy. Many would advocate exactly equal division regardless of need, or some other philosophy.
My Questions for You:
What do you think of the idea of dividing up assets based on a holistic view of equality, rather than based on a clear division?
Or, do you simply not care about equality and feel that money would be left based on some other decision process?
Or, do you feel very differently than I do, and you don’t believe in leaving money for anybody?
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The only way I think I would consider this would be if there were health issues or other issues that would necessitate one child having a greater need for money than the other. But other than that I think equality is important to avoid divisions in the family, which are almost inevitable under unequal distribution circumstances.
Money Beagle – I do agree that this is an issue that could cause discord if not handled properly with open communication, as well as understanding.
You have to be very, very careful here, or you can cost a disabled child their income. Be sure to consult an attorney who is an EXPERT in this area of law.
In our family one person has more health issues than others, plus she doesn’t have very good health insurance. Among the siblings we have agreed that when Dad dies we will give our share to her. It just makes sense. Of course we don’t know what is in Dad’s will.
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Maggie – that sounds very honorable of you and the siblings.
There was an interesting article on Forbes this week on the very same topic. They suggested dividing every thing equally to help prevent litigation. Apparently, if there is an unequal division one child could claim that you were not in your right mind when you divided things that way or that you made a mistake. Equal is better in my opinion.
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FSYA – HA! That type of suit just seems frivolous, since it’s a person’s prerogative to decide what to do with his/her own money. One would hope that families wouldn’t resort to that type action, if the parent is well meaning!
And while you are at it, you can put in a clause that anyone who contests the will forfeits their inheritance.
I only have one child and I’m not sure there will be another so anything I have will be left to my daughter. I guess this is one advantage to having an only child!
Jana – there you go! No issues there.
Hmm, I’m a long way away from multiplying, and even further (hopefully!) from the end of my existence, but I can definitely see where you might give more to one than the other.
Even if you beat the basics of finance into your child’s head, there’s still no way to know that they’re going to make good decisions with anything you leave them. I’m wondering how a parent would go about this, though…do you leave less to one? Maybe set up a trust to operate as an annuity?
I can think of several friends who will probably be in a position to inherit a pretty large sum of money in the future. Of them, I can’t see very many actually having much left a year after getting it. Money is disposable to them.
Then who says you can’t go one more generation down the line? If Susie has 3 kids, and Jim has 2, then maybe you might want to give 60% to Susie for her 3 kids’ school, and 40% to Jim for his three kids’ school. But then that brings in the whole timing element.
Hmm, no wonder why estate planning is a big business…I wouldn’t even want to have to bother with it.
JT – yeah, it’s big busniess alright. In some cases, as you allude to, there is a significant amount wealth being transferred. And, in the case of many beneficiaries, a lack of experience and responsibility. It’s no small consideration, I would imagine, for the benefactors. That said, all other things being equal, I’d go for just that – an equal division. It’s the examples I noted in my post that would be get me to think of doing differently, and would have to be done with great care and with open communication. Hopefully I’m many, many years from dealing with that!
If both your kids are responsible, but one is doing well while the other is not due to chance, then yeah makes sense to divide it according to what you think is fit.
But what if one is irresponsible and always broke while the other is sensible? Equal division would make more sense here.
We can’t be always impartial. Equal division solves that problem.
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MoneyCone – I agree with you. If one is irresponsible and the other is responsible, I’d lean toward an equal division. Irresponsibility is no excuse, and is different than the other issues I noted.
Not! My kids are very successsful and I expect to either use up the inheritance or give it my future grandkids in the form of education.
krantcents – I know someone with young children, who received a modest inheritance from his parents. Part of it was intended to go to his kids (benefactor’s grandchildren) for their eduction. I thought that was great, as he (friend) didn’t get financial help when he went through college. Nice to see the next generation get an advantage that the prior one didn’t!
My boyfriend’s grandparents paid for his college tuition. I think it worked out nicely, because even taking out loans for my tuition, I didn’t learn the value of money paying tuition – it is just such a big number when you haven’t had time to work much yet and understand how much work earning that much money will take.
So I don’t think his work ethic was much hampered by the free education, and they got to go to the best colleges they could get into, and graduate debt free – although still with the will to work, since there was no “grandparent” money to pay for any expenses after graduation!
Kellen – that makes sense. Once the free education was completed, there was no bailout. So, even though there would be no student loans, he would still have to take care of everything else upon graduation. That should be enough to keep motivated!
bless grandparents’ hearts. my g’s left enough money for myself and my two siblings to do four years at a college. my sister used hers up then took out loans for grad school; my brother’s got used on a private high school; and mine went towards four years at a private liberal arts college. i have a degree in art now, it’s very satisfying but i don’t make much, barely enough for groceries let alone student loans. i am so grateful to my grandparents for letting me pursue this field unladen with student debt.
cc – that’s so great that your grandparents provided you and your siblings with resources to go to college. It’s great to not have to deal with student debt.
Our money is set right now to be divided exactly evenly. However, if the circumstances of my children change, we may reallocate accordingly. This would be done very much in the open though and I would never have a will reading be a surprise.
Ideally, kids would all be raised with empathy and understanding so that if assets are ever divided based on need, there wouldn’t be any greedy resentment. Money causes so many issues in life…
Everyday Tips – I think your thoughts actually match mine on this, in terms of being open, raising kids with empathy and understanding, and planning for no greedy resentment if anyobody has tough circumstances (causing unequal division). Yes, money can cause a ton of issues in life, including families torn.
I would lean toward equal and have done that for my 6 kids. Of course, they are all still young. However, if there were some sort of medical issue that were to develop, then that might require a little more support. But given like opportunities in life, it is not up to me to bail out bad decisions. Life has consequences.
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CFM – I agree that irresponsibility doesn’t have to be bailed out.
I have no kid yet but I would think I go for dividing equally among the children. As my parents will divide equally between their two sons.
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SB – seems to be the predominant sentiment here so far…
I don’t have any kids at this point, but I think equality is always a safe bet. You made some good points for reasons to not give it out equally, but it would require a sibling that is really understanding to not wonder why the parent chose to give more to the other sibling.
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20′s Finances – I think you’re exactly right. It would take a lot of understanding by the sibling. One of the prior commenters (Maggie) noted a plan among siblings to help someone in need by giving inheritance shares to that individual. So, there are some cases where siblings can be understanding. Won’t always be the case, of course.
Equal is best, IMO. Sibling rivalry runs deep in many families, often to the grave. I do not think that it would be prudent to gift one child more simply because they are in a different circumstance than the other(s). It’s as if you would be punishing those children who turned into successful adults.
I also don’t agree w/propping up one’s adult children’s incomes thus slighting the more successful (or less successful, but less greedy) siblings.
If an adult child has a tragic turn, then of course you would offer to help if you had the means, but hopefully that money would be gifted at the time when it’s needed most…not after you’ve passed on.
Holly – that’s a really good point about gifting while living. That’s another approach. I certainly hope none of this comes to pass.
We only have one kid so it’s not a problem for us.
I have two brothers though and I wouldn’t mind it if my parents give more money to the one that need help. They probably aren’t going to leave much behind though.
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Joe – good for you, a caring sibling!
Hooray for CashFlowMantra “Life has consequences”. If you have money and want to give more to one kid than another, that is your choice. I’d give it while I was still alive though.
We’re into equal division.
Marie – another person mentioned giving while alive as well. It’s certainly another approach. In terms of life has consequences, if one child has major health problems and another is super healthy, I guess I don’t think the health problems are simply life’s consequences that he/she shouldn’t get help with. In that case, I would hope that the healthy sibling would have no problem with the unhealthy one being helped.
I do not have kids yet either! We say we are on the five year plan–in five years we will reassess:).
Not sure how I feel about this; I think it should not be a clear cut rule. On the other hand, would I want to cause a family rift for years to come?
Amanda – I generally (just my view) like the idea of equality. However, I agree with you that it shouldn’t be a clear cut rule, for the reasons I noted in my post. The family rift concern is a very real one for most families, and perhaps it’s clear communication as well as collective compassion among all individuals involved that could avert that.
We have provided for equal shares in our will. Although money does not equate to love, our opinion of what we think is fair may not be shared by our children. Should one son be more successful than the other, to take more or less than his share would be his decision, not ours.
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101 C – thanks for sharing. It really is a personal choice, and you have a good point – sometimes kids can actually be generous with each other based on how they perceive their own lives to be going.
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[...] Squirrelers: Your Will: Give to Kids Equally or Not? [...]
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I have two things to consider: health and financial responsibility. Obviously, the one who is in a not-so-good state of health needs financial assistance. Ont he other hand, would you like to leave your hard-earned money to somebody you know will not be responsible enough to handle it?
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College Investor – I agree about the health aspect, absolutely. In terms of financial responsibility, I’m assuming in my post that each sibling is, in fact, responsible. I wouldn’t want to give extra money to someone who I believe would lose it quickly due to irresponsiblity. However, if a kid made a bad move in the past, but had genuinely learned lessons and needed help, I’d view it much more positively in terms of giving a bit extra to that kid. Really, though, the idea of somewhat disproporionate giving is more due to other factors than responsibility.
[...] households if we save more. Can we have it both ways?”Squirrelers from Squirrelers presents Your Will: Give Equally to Kids or Not?, and says, “At some point, many people have to think about estate planning. When that [...]
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There’s a lot to be said for having only one kid: it certainly resolves this conundrum, leaving you only with the question of who gets the money if the child predeceases you (heaven forfend!).
I’ve often thought the only circumstances in which it would be fair to leave more to one child than to others would be if the privileged offspring had some serious health problem (physical or mental) that would disable him or her and make it impossible to earn a decent living or to set aside enough out of earnings to provide a secure retirement.
Otherwise, I’ve never thought it was right to tie strings on money left to adult children or to short one kid because you think she or he is irresponsible with money. What on earth do we care what the kid does with the money after we’re gone? We won’t be here to see it; if the kid diddles it all away, hurrah! It’s not our problem anymore. If you feel you just must exert control over other people’s decisions and lifestyle, however, it’s easy enough to put the money in trust and assign a trustee to manage it.
Funny about Money – I do agree with you that giving extra to an irresponsible kid isn’t a great idea. I do think that if one has been exceptionally successful and the other has dealt with misfortune not tied to any irresponsibility, it’s a different ball game. As for what happens when I’m gone, well – maybe I’ll see it differently later, but at this point I envision myself really caring about seeing that the money is used responsibly or just simply saved for grandkids. Of course, I’m talking about many years from now – and I’m not in a position to think about mass sums of mony at this point anyway
[...] comes up with a really good post on an unusual question: in your will, would you leave unequal amounts to your kids? It’s not at all a simple [...]
I will definitely leave equal shares to my two kids, with one caveat. I told them both that if they don’t manage their money properly, they get nothing. I got this idea from The Richest Man in Babylon. Will I follow through? I’m not sure at this point and I hope I’m never forced to make that decision.
Bret – it sure is a topic that brings up all kinds of opinions and reasoning. I can understand not wanting hard-earned money to be handled irresponsibly by a beneficiary.
I plan on having one child, so hopefully this won’t be a problem. While things won’t be equal at all times (what family is?), it’s important for things to be generally equal over time. For example, a relative paid for private undergrad for her daughter while her son went to public school. Now he is in grad school, and she has agreed to pay for his first year of tuition because his undergrad was so much cheaper. It’s not *exactly* equal down by the dollar, but her gesture meant that there’s a sentiment of – your sister got more monetary help during college, but I recognize that, and we are going to do our best to help you out as well.
It would be horrible for siblings to feel slighted or unequal in the eyes of their parents because of a will. An inheritance can really rip apart a family, and once you are gone you want your kids to have good relationship with each other. If you have to leave unequal amounts, think long and hard and for goodness sake,*talk* about it with the kids while you are still alive!
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Well Heeled – I’m a long way from this time, I mean it’s way off hopefully! Anyway, I do agree that when kids are older, it’s important to discuss such matters. Even if the split ends up even among kids, it’s best to be open and talk. Totally agree with you that people want their kids to have a good relationship with each other, it would be heartbreaking for many people if that didn’t end up being the case!
[...] Your Will: Give to Kids Equally or Not? I’m definitely in the “it’s your money, do what you want with it” camp. There’s no need to give your estate equally to all of your children. (@ squirrelers) [...]
I think possibly health issues might be a reason to differentiate. However, you never know what the future will hold. One child could be happily married and wealthy one day and then have a devastating illness filing for divorce the next.
Liz – you’re right. Things can change in a hurry for people. A kid who seems to be so very fortunate compared to his sibling, for example, may see a reversal of fortunes and could end up being the needier one. Good point, life isn’t static as of the time of a parent passing away.
I love this topic, because it is something that I have thought about a lot in regards to my parents’ will.
I am independent, in a steady relationship, no children, with a good, reliable job, and I have always been the financially responsible one. My sister is unemployed, has three children and a couple failed marriages, and lives at home on the farm with mom and dad with two of her children (the third is there on the weekends). In addition, I live several hours away, while she works regularly on their farm and has helped out with my dad’s law practice.
I think that we are a great example of why one sibling should get more of the inheritance– She should certainly get the farm– It is her home, and she has put a lot of work into it. She should also get money, since she does not have an income (Ideally, this would be set up so that she’d receive a certain amount each year for several years, so that she doesn’t have to budget). I have discussed my parents’ will with them and expressed that whatever they decide is fine with me, but I’m sure they know that even if they give to us equally, I’ll be sending money her way.
I also think that the number of children involved makes a difference– If instead of just the two of us there were six, it might make more sense to to distribute to the kids equally, since the average percentage that each child is getting is considerably smaller.
Jamie – thank you for sharing! This is an example of why some kids might simply need more help than others. I think it’s great that you’re very understanding toward your sibling, and understand that she would have significant challenges in her situation. Good for you.
I suppose I am in this situation now, a relative of mine (Aunt) is passing away due to cancer and has already let her will be known, that everything goes to me (nothing to my two sisters). It’s not a slight on my sisters, it’s simply due to the fact that I’ve been around and have been helping, supporting and in some cases taking care of this relative while my sisters long ago moved away, and could not provide the same support. As a result, there are no hard feelings, my sisters couldn’t be happier for my inheritance. One could argue that since we are all her nieces, we should get an equal share, but due to circumstances we are not.
Perhaps the same could happen with parents and children, if one child is around to take care of them in their old age, or ill health, and others are not for whatever reason, shouldn’t that child get the lion’s share of the inheritance?
Stephanie – thanks for sharing your own story. You bring up another angle to this dilemma that’s a good discussion point – should the amount of dedicated help one sibling provides a parent (or aunt) be taken into consideration in that way? It seems like there’s open communication in your family, and that’s really good.
I was going to say something along the lines of what Stephanie said. Sometimes the passing of a parent will have followed a lot of care and expense from children in order to support that parent during the last few years of their life. In that case, I think it would be equitable to give the child/children who provided the bulk of the care or funds with a larger share of the inheritance. However, that should be known and agreed upon by all parties before such a decision is made, otherwise it will cause ill will. One also shouldn’t be taking an elderly parent in solely for the chance to have a larger inheritance.
Kristin – good follow up points. Agreed on open communication as you noted, it’s important to maintain positive feelings. Also, while someone might want to leave a little more for a certain person, that person shouldn’t be helping out for financial gain. That makes somebody just like paid help, or like a golddigger of sorts! So, I agree with you.
My family actually had an agreement like this – one of my aunts is a doctor who lives close to my grandparents, and so she took on the lion’s share of the work especially when they were ill. She was paid for her time and work through the money that they had while they were alive… I think that’s almost a better way to do things. What about settling accounts while the older folks are alive (especially with the $10K gift income allocation per person per year)?
Well Heeled – it’s good when a family has some kind of logical/supportable system to handle such situations. If there’s buy-in from everyone and open communication too, that’s a really good thing in terms of avoiding hurt feelings and strained relationships. As for the $10k, I’m sure that’s used quite a bit in different situations.
I think need because of age is also a dimension that could be considered.
As an example, I am the youngest in my family. When I was in high school, and my older siblings were already out of college, my mom reminded me periodically that her will had me getting slightly more money than my siblings because the extra was to cover college and a good car (something she had provided to them in the past). Now that we’re all out of school, it’s probably evenly divided.
Azuma – that’s true, age might come into play as well. If one adult kid already had college paid for, but a younger kid is just enrolling, that kid might need more help than the kid who already got so much help. Good point.
I say this from my own perspective, as an only child [so no underlying issues with siblings] and as an attorney who has seen [and read, and heard of] oh so many problems in this regard.
If I had a child with a medical challenge, special needs etc, I would likely leave a disproportionate amount to that child, quite possibly in a trust form. This would be well-discussed with any siblings [and in fact a sibling would likely be among the trustees]
However all other inequities in life are generally the result of personal choice. Not all, certainly, but many. And there’s nothing wrong with addressing financial pitfalls while you’re alive [if your child is really having an unusual and completely random financial crisis, why not help NOW?].
If one child chooses to have 8 kids, that’s their CHOICE. Why give extra to them because the other sibling only had 2? [giving directly to the grandchildren is another choice - but still should be equal among those 10 kids].
If one chooses to work in the public sector, or the arts, and never will make what his wall street brother makes, well, that’s his choice – and he gets other benefits from it obviously – why should you try to ‘even things out’ with your will?
The truth is that even without frivolous litigation [which is usually unsuccessful but costs money in attorney's fees] being unequal for any but the most basic reasons [a child who has significant disabilities for example] will lead to divisions in the family. Let the kids equal things out if they wish [as at least one comment states] and then they feel more like a family instead of less, with each one wondering just why mom and dad left their brother more than they got.
and wanted to add, I have three kids, and they’ll all be getting equal shares of our estate.
I just had a conversation with some relatives and their perspective was a very different one than I’ve read so far. They said that an inheritance should be divided among the children according to how the children treated the parents. In other words, the child who called regularly, who moved in to help with disability, who was otherwise loving (from the parent’s perspective) is the one who should get more than a child who did not do those things. What do you all think about that?
This happened to a friend of ours. Two adult children. The sister married a man who did very well and they have no financial concerns. The brother worked in a service profession. While his salary is adequate, his future was not secure. When their mom died she left everything to the son. It was a surprise. She was deeply hurt and no longer speaks to him.
If you are considering dividing your estate unequally, talk to the family while you are alive and explain your motives. It could save lots of heartache after you are gone.
I re-read my comment
The SISTER was deeply hurt and no longer speaks. I don’t think the mom is speaking to either of them.
[...] Squirrelers – Your Will: Give to Kids Equally or Not? [...]
[...] Your Will: Give to Kids Equally or Not? I’m definitely in the “it’s your money, do what you want with it” camp. There’s no need to give your estate equally to all of your children. (@ squirrelers) [...]
No no no. I disagree completely. Dividing it up equally is the only fair way to go. Giving one child more than another because of different life choices is not fair and it’s not up to the parent to punish the more financially successful child by choosing to give more to the other. Talk about an easy way to cause rifts in the family.