But unequal inheritances can lead to sibling fights after the death of one parent. Some disputes end up in court, especially if an adult child suspects that one parent was the target of what lawyers consider an “undue influence” from the brother or sister who benefited the most. Before explaining how to handle unequal inheritance, it will be important for you to understand what inheritance really is. An inheritance is any asset that you leave to a specific person within your will.
These assets can include anything from cars to jewelry, clothing, money, 401k accounts and more. When an inheritance is unequal, this means that the value of the assets left to each individual does not equal the same amount for each person. However, even in cases where a child can clearly benefit from an additional inheritance, other siblings may not always be on board. Unequal inheritances can give rise to conflicts between siblings when the estate is divided.
Some fights become so uncontrollable that the brothers take each other to court. In some cases, siblings who receive less believe that siblings with a larger share of the inheritance must have manipulated or influenced parents to leave them more. This can lead to bitterness, mistrust and broken relationships after the death of a parent. Unequal distributions can also cause resentments.
The person who receives less than others may see it as a punishment, especially if the amount was docked to reflect past financial aid or to account for personal wealth. An heir I know refers to this as “the success tax. There is a significant age difference in your children. Another situation where unequal distributions can be justified is when there is a large age difference between your children.
Younger children will need care longer than older children. This is especially true if the older one has already received a full education before the younger children receive the same benefit. The elderly parents we see in our work here struggle with their concept of equity with adult children when some do better financially than others. They wonder, does the powerful executive daughter really need the same inheritance as her struggling artist brother? Or what about the son who is a teacher or works for a non-profit organization? The other brothers are financially successful bankers and professionals.
Should the estate be divided exactly equally after the parents have left? This problem is a dilemma for parents who want to do the right thing. Some go ahead and keep everything the same, regardless of the financial need of any heir. I hear them say that they feel guilty if they make estate plans with the intention of giving unequal shares between their children. Other seniors want to reward those who pay more attention to them in old age compared to children who do not find time to visit them.
The one who receives an unequal share is more likely to start a probate fight after the death of mom or dad, arguing that it is not fair. Uniformly, lawyers try to avoid these problems by incorporating words into the inheritance documents to the effect that if someone challenges the estate plan, they receive nothing. Estate planners suggest that when parents create unequal inheritances, they should have a conversation with each child to explain their reasoning. It can provide the flexibility of an unequal distribution without the risks of an explicit unequal division of assets in a will.
More importantly, the uneven distribution of an estate can cause resentment among children after the death of their parents and create a lot of family drama. If you are a matriarch or patriarch in a position to plan estate, consider any uneven distribution among your children as an invitation to waste assets in costly probate court fights. If you think a conflict may arise when talking about unequal inheritance between your children, you can choose to hire a mediator who is a professional who can help your children overcome their frustrations with their decision and who is a sounding board during the conversation. Explaining why there is an uneven distribution can, at the very least, eliminate “why” questions after parents have died.
Leaving an unequal inheritance for your children is more common than you might initially think, and the number only seems to be increasing. In 1995, a study was conducted that showed that about 16 percent of all individuals left an unequal inheritance. This is especially important in situations where children will receive an unequal share or different assets. Here are several situations where a financial planner can help you resolve if you are considering an unequal distribution of your wealth among your children.
And a recent BMO Wealth Management survey reported that about 40% of respondents who had received unequal inheritances felt that the distribution among the family was not “fair.”. One of the main reasons people decide to leave an unequal inheritance for children is when one of their children becomes their primary caregiver later in life. One solution that some parents try when distributing an estate unevenly is to discuss with their children the reasons behind it. Parents think that giving an unequal share of the inheritance to one child over the other is the best way to correct the situation; however, unequal inheritance carries dangers that parents may not consider when creating an estate plan.