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. You can always check out estate planning items for further information on how to do things exactly the way you want to.

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?