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Dividing Up Your Estate: Does it Ever Make Sense to Split it Unequally?
Townhall.com ^ | June 23, 2010 | Carrie Schwab Pomerantz

Posted on 06/23/2010 9:24:56 AM PDT by Kaslin

Dear Carrie: I have two grown sons: one's a corporate attorney and one teaches English at a public high school. Needless to say, their incomes are quite far apart. I'm tempted to leave my less-well-off teacher more money, but is this a good idea? And if so, how's the best way to do it? -- A Reader

Dear Reader: Your excellent question raises some important issues about fairness and about how to handle estate planning -- particularly the importance of communicating with your heirs about your wishes and intentions. Even the most generous of impulses can be misinterpreted, especially those involving family and money.

EQUAL IS EASY (AND PROBABLY RIGHT)

I'll start by saying that my natural inclination is for parents to treat their children equally. I completely understand your impulse to provide extra assistance to your son with fewer resources, and that ultimately may be the best decision -- but I caution you to proceed with care.

First understand that both of your sons may easily perceive their inheritance as a symbol for your love. Your sons are adults, but it's amazing how childhood insecurities can linger. A perceived slight can trigger resentment that can last for decades.

Also, things can (and do) change. One son may be earning a lot more now, but it's impossible to accurately predict the future.

TALK CAN LEAD TO CONSENSUS

If you decide that giving more to your son the teacher is really the right thing, explain your plan to both sons now, starting with the wealthier son. Be sure to present it as an idea -- not a fait accompli.

Hopefully, he'll be receptive and understanding. Then you'll be able to discuss your plans with your other son. A third conversation with both of them should ensure that the idea is acceptable to all concerned.

Of course, if your wealthier son is unhappy, you've got some rethinking to do. One possibility is to treat the two equally in your will, but make annual gifts to your son the teacher to help him out now (or perhaps to his children, such as with contributions to a 529 college savings plan). Or you might come up with an estate plan that provides more money for the teacher, but evens things out by bequeathing some family heirlooms or other non-financial assets to your wealthier son.

I'll add here that if your wealth is substantial, now is an excellent time to talk to an estate-planning attorney to ensure you won't run into a big estate tax bill. Although estate taxes were repealed at the end of 2009, they will return in 2011. Up to $1 million is free of tax, but anything above that is taxed up to a maximum of 55 percent, depending on the size of your estate. So, plan ahead.

As for your children, I know you're trying to be fair, so think carefully before you decide to give one of them more money than the other. After all, the last thing you want to do is to foster resentment that could live on for years after you've gone. Good luck.


TOPICS: Business/Economy; Editorial
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To: northwinds
That being said, would you be a little surprised/upset/hurt if your father left his entire estate to your ner do well cousin with a drug habit who had never visited him?

I would be surprised, but not upset or hurt. It would be his decision.

61 posted on 06/23/2010 2:22:08 PM PDT by Fundamentally Fair (Bush: Mission Accomplished. Obama: Commission Accomplished.)
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To: Coldwater Creek

Give them monies and interest in properties now. Check but I think it is up to 10K this year, and 10 k more jan 1 Then divide up the rest.


62 posted on 06/23/2010 2:24:13 PM PDT by Chickensoup (The Acting President....is an incompetent puppet of Soros.)
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To: EBH

“Proverbs 13:22
Leave none to the sons.”

What Bible is that from?


63 posted on 06/23/2010 2:36:42 PM PDT by Reddy (B.O. stinks)
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To: northwinds

Northwinds.... FF entered this thread with a snotty remark. Just ignore it. You do not need to explain yourself.

Have a great day.


64 posted on 06/23/2010 2:45:34 PM PDT by Reddy (B.O. stinks)
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To: Kaslin

Equally is definitely the best policy.

My mom is leaving a life estate in her home to my loser sister - who has never had a real job and has never met a drug she didn’t like. To me this seems like rewarding bad behavior and punishing success.

So eventually the estate will be split “equally” but my other sister and I have to wait til the loser dies to receive our share of the home.


65 posted on 06/23/2010 2:49:58 PM PDT by conservativegirl
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To: Hoffer Rand

There might be an assumption in society that children are somehow entitled to get something from their parents when their parents die, but there is actually an encouragement in the Bible that instructs believers to leave an inheritance for their children.


66 posted on 06/23/2010 2:49:58 PM PDT by Reddy (B.O. stinks)
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To: Kaslin

I say leave an equal inheritance to all children unless one of them was born handicapped.


67 posted on 06/23/2010 2:51:18 PM PDT by Reddy (B.O. stinks)
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To: marron
Thanks!

They all know that I'm alright with dying, I just don't like the sick part. Their dad died three years ago and they know that he had a personal relationship with the Lord. I knew when he was sick that I was also, but did not tell anyone because I didn't want him to know. My children only found out by accident because I was sick with pneumonia and they were there when the doctor showed up.

I will keep your advice in mind sounds reasonable to me.

Maria

68 posted on 06/23/2010 3:01:39 PM PDT by Coldwater Creek (ue)
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To: Reddy
"I say leave an equal inheritance to all children unless one of them was born handicapped."

X2

69 posted on 06/23/2010 3:06:11 PM PDT by northwinds
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To: Reddy
FF entered this thread with a snotty remark. Just ignore it. You do not need to explain yourself.

1. I asked a question. It was neither snotty, nor a remark.

2. If you read the thread, we worked it out.

3. It is impolite to post about someone without pinging them.

70 posted on 06/23/2010 4:14:33 PM PDT by Fundamentally Fair (Bush: Mission Accomplished. Obama: Commission Accomplished.)
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To: Raycpa

The corporate attorney may get downsized as he faces age discrimination in his 40’s or 50’s, and the teacher earning 30K now may someday retire with a 60K yearly pension. Set up education funds for all the grandkids and divide the balance equally between the two sons.


71 posted on 06/23/2010 9:09:12 PM PDT by Ciexyz
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To: DallasDeb

Based on the experiences of my Dad and his three siblings when Grandma died, the one who had the highest income incl. substantial property, was the one who nitpicked loudest over every dime of the estate. The only thing they divided without rancor was the towels.


72 posted on 06/23/2010 9:15:40 PM PDT by Ciexyz
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To: Balding_Eagle

I know of a situation where the Mom of the family was giving away the maximim gift to each of her three kids every year, then she had a spike in her medical expenses and ran out of money, except for her SS check.


73 posted on 06/23/2010 9:28:15 PM PDT by Ciexyz
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