While a lot of people begin their estate planning with the idea that “share and share alike” is the only way to go, equal distribution of your assets among your heirs isn’t always the equitable thing to do.
It’s not illegal to leave your beneficiaries and heirs unequal shares of your estate, but you may be worried about the consequences. A lot of people fear that they’ll ignite a family war and throw their estate into litigation if they don’t divide everything as equally as possible. Here are the things to consider:
Why unequal distributions may be the right choice
There are all kinds of reasons people choose to leave unequal shares to their loved ones, including:
- One heir may have less financial stability (and greater financial needs) than others due to chronic health issues, career setbacks or the need to support a larger family.
- One heir may have given up a significant amount of time, energy (or even a career) to act as a caregiver for a parent, and deserve a larger share of the estate in recognition of their sacrifices.
- If there is a family business, the heirs who are most actively involved in the company’s operations may simply deserve a larger stake in its future.
- One heir may have “borrowed” against their inheritance during their lifetime, while the others were more self-sufficient, so unequal distribution can “even things out.”
While all your heirs may not be totally satisfied with your decision, the best way to approach the situation (and the most likely way to minimize challenges to your estate after you are gone) is with complete transparency.
In other words: Don’t keep your plans a secret. Communicate your decision and your reasoning to your heirs so that there are no surprises later. That allows your heirs to voice their feelings about the situation – but it also creates a record that you were acting of your own free will and were not being coerced by anyone. You can also leave a letter of intent with your will that explains your rationale, and work with a professional to make sure that your estate plan is legally compliant and harder to challenge.
Equal distribution of an estate may be many people’s “default” option, but fairness doesn’t always mean “equality.” If you think that unequal estate distributions may be the right choice for your family’s future when you’re gone, don’t hesitate to discuss the options when you start making your plans. A proactive approach can still minimize the potential for disputes.