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Your Children And Your Will
~A house divided?~
By David M. Morris
Someone once said that “life is like a box of chocolates –
you never know what you’re going to get”. Where estate planning
is concerned, perhaps a better description would be that life is unequal in
its distribution of assets and resources. That same inequality may carry over
into your family, with children of different ages, talents, interests, needs
and degrees of material success.
When planning division of your assets, you may believe in
a policy of “share and share alike.” This is the easiest method
(and often the way to avoid conflicts and complaints of discrimination), but
you should recognize that equality does not necessarily mean fairness. You
must, therefore, be willing to seek a division of assets that will take into
account the particular circumstances of each child, even at the risk of producing
some conflict.
A more practical approach to the division of assets is one
in which you recognize and compensate for differences in the abilities and
needs of your children. Through your estate plan, you have a chance to provide
a measure of fairness that your children may not otherwise have found in their
own lives.
The process is a delicate one, certainly more complicated
than dividing a pie into equal slices. Bringing about family fairness through
an estate plan may be the last chance you have to give your children an equal
start in life or to help them compensate for bad luck or bad fortune.
Consider the following scenarios:
 Age. Assume
you have two children, ages 22 and 12. Should you split your estate in half,
even though the 22-year-old has been through years of private school education
and college and the 12-year-old has further to go?
Assets. Assume
your daughter becomes a partner in an investment-banking firm and quickly builds
up $3 million in assets, while your son becomes a high school English teacher
who earns $29,000 per year. Should you leave your estate in equal parts to
your son and daughter?
Past
gifts. Assume you have given your 24-year-old son $100,000 worth of stock
in your business as an inducement for him to work with you. You have not,
however, given your 18-year-old son a similar gift. Should you divide the
assets in your estate on an equal basis?
Investment. Assume
you have given one child stock in company A, which has quintupled in value
to $300,000. You have given another child stock in company B, which has gone
bankrupt. How should you then allocate the balance of your assets?
In all of the preceding examples, an equal division of property
has the potential to create or perpetuate unequal results. Thus, there is an
even greater need for financial and estate planning that leads to reasoned
and careful decisions about how you leave property.
Fortunately, there are ways for you to achieve more equitable
results. Oftentimes, assets such as a business that will be turned over to
one child can be offset by the cash from life insurance policies that will
go to other children. Appropriate adjustments should be considered and implemented
in a way that indicates they are made for the purpose of achieving a greater
level of fairness among children, rather than out of preference for one child
over others.
These are difficult decisions to make. You’ll need
to carefully discuss your estate planning needs with your legal or tax counsel.
However, in the long run, your children and family will benefit from your planning.
David M. Morris, JD, CLU, is President of FranklinMorris, Coordinating Broker
for the Bar Associations Insurance Agency, Inc. For more information on the insurance
benefits available to MSBA members, visit our website at www.msba.org/departments/membership/baia/franklinmorris.pdf.
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