Fair ≠ Equal in Estate Planning

When it comes to determining what assets get left to which beneficiary (child, friend, sibling, niece, nephew, etc.). I often hear one of two things…

“I want to give equally to my beneficiaries,” or “I want to be fair in how I distribute my assets.”

Equal means just that – Party A gets $000, Party B gets $000…and so on.

Fair means Party A gets $000, Party B gets $00 and Party C gets $0. There is usually an underlying reason why different amounts are left to different parties – helped B with a down payment on a business or house, paid more in tuition assistance to C or perhaps to C’s children.

Ultimately, whoever is behind the trust or will can do whatever he/she wants with his/her assets. It’s your choice. The default is generally equal, in that it keeps the peace the best after the person is gone.

“A lot of times, an inheritance is equivocated to love and affection—it’s not just about the money, an inheritance is the last time parents have communication with their children,” says Avi Z. Kestenbaum, partner at Meltzer, Lippe, Goldstein & Breitstone, LLP based in New York City and on Long Island.

Sadly, I’ve witnessed a previously loving family dissolve because an adult child who moved in with Mom and cared for Mom for the last 5+ years of her life – took lesser jobs so she could work around Mom’s needs, relocated from her previous home, sold her house, etc. – was left the house in Mom’s Will. Well her siblings went ballistic. Even though Mom had been very generous to all of the children during her life and some were VERY successful in their own right, they fought and challenged the care-taker child.

If you go the “fair” route…again it’s your choice, it becomes critical to have a discussion with your beneficiaries as to why “fair” and not “equal.” “It’s always important for clients to have a conversation…explaining the reasoning behind the decision to leave an unequal inheritance so that there are no surprises after the parents pass away.”

As difficult as the conversation may be, it’s much better than setting up a situation likely to result in hurt, anger, acrimony, and perhaps permanently shattered family relationships.

See: When Equal Inheritance is the Wrong Answer.