Estate Planning: Should You Treat Children Equally In Your Will?

The average inheritance today is $46,200 — an amount far less than the average American expects ($72,200). It’s also increasingly common for parents to bequeath unequal inheritances — 35% of Americans 50 and over are now opting to assign their children different amounts, up from 16% in 1995, recent data from National Bureau of Economic Research reveals. Although dividing your estate equally among your offspring is typically the fairest option and can help avoid legal conflicts between siblings, unequal distribution can sometimes make the most sense — for example, if one child has significant financial needs, or you wish to acknowledge individual contributions.

Navigating Inheritance: Strategies for Equitable Estate Distribution

Fortunately, an estate planning attorney can help you devise a will designed to protect your legacy and address specific wishes, deter potential conflicts, and ensure a smoother distribution process.

Distributing Equal Shares

Distributing your estate equally between your children makes sense if their current life situations and needs are similar. So, for instance, if they’re all working full-time and financially independent, and none of them have significant mental or physical health issues, you’ll likely want to split your assets equally among your children. If you're also leaving real estate and other physical belongings in your will, you'll need to figure out their financial worth, and what's fair to give each child. For example, should one child be fond of your Massachusetts property and reside nearby, you might leave that to them, while you could give your other child the vacation home in Hawaii. Variances in property values can be balanced out with money or other valuable items.

Fair But Not Equal Inheritance

In some cases, on the other hand, unequal — yet equitable — distribution is fair. For instance, maybe you’ve already given one child far more money than the others — say $40,000 for tuition fees, a wedding, starting a new business, birth of a child, or house downpayment. In this case, you may leave them $150,000, and $190,000 to the other child. Or, maybe one of your children is your caregiver, and they deserve to be financially compensated for their dedication, lost time, and lost wages.

Conversely, if one of your children has a disability, you may want to create a special needs trust for them that contains most of your estate. Although your other children will probably appreciate the financial needs of their disabled sibling and understand the need for unequal inheritance distribution, you should still inform them of your plans, so they know what to expect once you’ve passed.

Estate planning: protecting your legacy

Unequal inheritance distribution does mean there’s a risk your children contest your will and file a lawsuit. Careful estate planning, however, can protect your intentions, reduce potential conflicts, and ensure a smoother distribution process. An estate planning attorney can help you devise a will without succumbing to “undue influence” from your children, in particular. “Undue influence” means that one of your kids suspects, and may potentially attempt to prove in court, that external pressures affected your decisions during the creation of your will — so, the final document doesn’t reflect your true intentions. Working with an estate planning attorney — and without input from your children — means you can reduce the risk of legal challenges relating to “undue influence”, even in the face of unequal inheritance.

No-Contest Clause in will

It’s also important to include a non-contest clause in your will — this deters beneficiaries from contesting your will by threatening the forfeiture of their inheritance if their legal challenges are unsuccessful. To make this clause more effective, a small gift is also given, so the person challenging the will has something to lose, even if it's not a large amount. Since the specifics of non-contest clauses depend on your state, it’s important to be clear on the law before going down this route. Note: non-contest clauses are unenforceable in Florida and Indiana.

Conclusion

Ultimately, remember: your assets belong to you, and it’s therefore completely your choice how you distribute them. However, an equal split is usually the best way to go if your kids are in similar life stages, you’ve provided them with equal amounts of financial support over the years, and none of them have been your caregiver. Moreover, personal finance and investment planning can also empower you to make informed decisions about asset management, tax implications, and wealth distribution, ensuring a more effective and thoughtful approach to passing on inheritances.