Like most people who have more than one child, we have to be careful about what we give to one child and not the others. When my children were younger, they were keenly aware if one child had a birthday, that child was going to get a present. The other children, particularly the younger children, found this to be quite unfair, as they were not able to open a present at the same time, so they felt slighted and ignored. We usually solved this problem by purchasing a small gift for the child whose birthday it wasn’t, and allowing the non-birthday child to open the present at the same time as the birthday child. This seemed to satisfy the non-birthday children, as it was apparently opening the present in front of everyone else they wanted and not just the present itself. We felt fortunate that such an easy solution was available and kept all of our children happy.
As our children have grown, they are less concerned if one child gets a present for a birthday, and they do not, as they now understand that birthdays happen at different times and they will get their chance to have a birthday party or get birthday presents when their own birthday comes around. It is nice to have older children to understand this, so that we don’t have to come up with presents for all of them every time one has a birthday.
We are careful not to have too much for one child on Christmas, so the others don’t feel slighted or ignored, but it is certainly an interesting balancing act. Do we give similar dollar amounts worth of presents, or a similar number of items to open? It seems like the answer changes from year to year. We do our best to keep things equitable among our children when it comes to presents, but it does present a challenge.
The same can be true of splitting up assets among your children when you pass away. It would seem fairly simple to split assets among your children when you pass away, but it doesn’t always work like that. If you give equal portions to each child, will you require that physical assets be sold? Would you want the children to hold onto real estate assets that you have, or do they need to sell real estate? Have you given money to one child that needs to be paid back to make everything equitable? Or, do you have anything that might be special to one child, but not as special to another child? You need to consider these types of questions in your estate plan.
To avoid fights, you want to be as clear as you can with what you want to have happen with assets going to your children through your estate plan. You can be as specific, or as general as you like, but you want to make it clear what you want to have happen so that there is less, or no, room to fight over what is to happen. You want to carefully choose who receives what assets, and who will be in charge of carrying out that process. You can decide which child gets what assets, and you can include them in figuring out that decision, but you want your final decision to be yours, and not be just what the children tell you.
Make Your Wishes As Clear As Possible In Your Estate Plan
When setting up an estate plan, you can be as specific, or as general as you like in setting up a distribution of assets. In my case, we have three children, so if I say that all assets are to be split among my children equally, ⅓ to each child, that would seem fairly straightforward. However, it may not be. I own my house, and I have a rental property that was the first house I bought, so I have two pieces of real estate. We also own three cars, now that we have three drivers, and we have one grand piano that all three of my children are learning to play. The easiest way to split all of these assets up among my children may be to tell them to simply sell all of the houses and cars and divide up the money. If they tried to cut up the houses with chainsaws and take a third of each house, that would be interesting and likely make the news, but it wouldn’t preserve the value of the assets and probably wouldn’t make any of the kids happy! Since there is not a default rule on what to do with assets after you die, you would want to state assets are to be sold if that is what you want. The cars also might go to my children, but they may each want a specific car and fight over one car, that may be an issue. Also, splitting up the piano may prove difficult if more than one of my children wants it. It might be best to sell off the assets and split the money, or give one child a specific asset and compensate the others with more monetary assets.
Rental Properties and Your Estate Plan
Selling assets may not be what you want to have happen. I have many clients who have acquired rental properties over the course of their lives and they live off the rental income. Many of these clients want to pass the rental properties on to their children, and allow the children to receive income from the rental properties. I can see how this would be a desirable outcome, since the rental properties have likely become valuable and provide significant income. If you want to pass along rental properties to your children, then you will want to account for the necessary work involved in managing such properties. One, or more, of your children may want to manage the properties, while other children may not want to manage the properties, but rather just enjoy the income from the properties.
If something like that is the case, you will want to lay out how the property managing child is to be compensated, while still having the rental properties benefit all of your children. Often, one child is living in a rental property owned by a parent, so you will want to dictate what happens in that case. Should the child be given that rental property as part of their portion of inheritance, or does the child need to pay to purchase the house if you pass away? How much should the child pay if that is the case? Does previously paid rent count, or does the house need to be purchased using the original purchase price as the value, or the current value of the house when you pass away? All of these questions should be considered and answered in your estate plan, so that you are as clear as you can be in making your wishes known. The clearer your wishes are, the less likely your kids are to fight about things.
Carefully Pick Who Will Carry Out Your Estate Plan
When you are setting up your estate plan, you want to carefully pick who will be in charge of the estate plan. If you pick one of your children, then that child will need to communicate with the other children about what is happening and what the timing is for getting the estate plan carried out and completed. I have seen many families grow suspicious of one sibling who is carrying out the estate plan because they think it is taking too long, or that the sibling carrying out the estate plan is not doing what they are supposed to do. One way to avoid such suspicion is to pick someone outside of your children to carry out your plan, but that may lead to other difficulties. You can certainly pick one of your children to carry out your estate plan, but you want to carefully consider that decision before you make it.
In some families, the children get along, so it would not be a problem to have one child carry out an estate plan. In other families, the children seem to get along because the parents keep the peace. After you pass away, your children may fight over assets and how they are to be handled. You want to choose someone to be in charge of your assets who can handle questions and navigate the difficulties of different children with different opinions on how things should be done. This can be a difficult choice, but is an important one, so you need to carefully consider who to leave in charge when setting up your estate plan.
You Get to Choose What Your Children Receive
Ultimately, the choice of what you leave to your children is up to you. I know many parents who don’t want to cause fights or hard feelings among their children, so they will ask the children what they want to do, and try to satisfy all of their children’s requests or demands. While that sounds like a great idea, it can sometimes be overly cumbersome or impossible. I am not saying you should not take your children’s requests into account, but rather I am saying that you need to make the final decision for yourself. Certainly you want to consider what you children request or want, but the final decision is up to you.
You can choose to exclude a child, especially if your relationship has become stratined, or non-existent with that child. But, excluding a child often leads to fights after you are gone.
You can choose to treat your children equally and let them figure out how to divide assets. This is also a quick way to lead to fights.
You can choose to treat your children equally, and specifically describe who should get what assets, and how to equalize such assets. If one child gets a specific rental property, then you could give a different child a different rental property of similar value, or you could have monetary assets split up among the children so that each child gets a similar dollar value of assets. You could have a conversation with your children about what they would prefer, and then write that into your estate plan. Involving your children in the discussion of how to split up assets can help avoid fights in the future.
No Matter How You Set Up Your Estate Plan, Set It Up Right
Using a will or a trust can accomplish getting your assets split among your children. Whether a will or a trust would be advantageous to you is a separate discussion from the topic of this blog, but choosing the right estate planning documents can help accomplish your goals.
Working with an experienced estate planning attorney can help you work through the specifics of what to do with your assets, and also help you know which estate planning document will help you accomplish what you want to do. You want to get your estate plan right, and your estate planning attorney can help you set up an estate plan to avoid future fights. If you would like to schedule an appointment to talk to an estate planning attorney and figure out what is right for you, you can go here.