When building an estate plan, most individuals will include a will. This legal document outlines how the decedents wish to divide their estate among heirs.
For parents, finding an equitable division among siblings can prove quite challenging. Though an equal split of cash may seem fair, some siblings may feel slighted or forgotten. How can parents fairly divide their inheritance?
4 METHODS OF SPLITTING AN ESTATE
All families are different, so it stands to reason that their estate plans are different as well. As much as one strategy may work for a family, it may have the opposite effect on another. The following tactics may help parents equitably distribute an inheritance among their children.
When discussing the inheritance, parents may try the following tactics:
- Equal division: The most straightforward way to divide an inheritance is in equal shares. Though monetarily equivalent, siblings may not see this as fair. Some siblings may believe they deserve more for certain familial contributions their siblings neglected.
- Need-based: Parents understand their children’s differences better than most people. Some heirs may need more help than others. Often, a sibling who does not require any financial support from their inheritance may willingly give up their share to a family member who needs help. Communication is key to this approach.
- With gifts reduced: Some heirs may require financial assistance before their parents pass. In these cases, the will may reflect these contributions with a reduced share. Decedents may also consider deducting the value of requested gifts — a family heirloom or vehicle — from an inheritance.
- Family business allocation: Many families work together in a family business, but not all. Some parents may want to give the siblings involved in the family business a greater share of the inheritance to continue funding operations.
BUILD AN ESTATE PLAN TOGETHER
Grief affects everyone differently, but parents can help a family get through the challenge and a comprehensive estate plan. Families interested in drafting a will together can reach out to a local attorney familiar with estate planning.