The gene-pool can be fascinating, which is echoed by the sometimes vast differences observed between two siblings. No two children are the same. Parents may have one child that is highly motivated, ambitious and ultimately successful, who can provide for him/herself without need for extra support. Parents may have a second child, who sees the world in a different view and is not concerned or perhaps unable for a variety of reasons to provide for him/herself. The parents treatment of the two latter types of children can be very different. Parents may make lifetime gifts to the second child with the best intentions. The same parents may want to ensure equal treatment all around.
Additional Estate Planning is needed when parents that want to ensure complete equal treatment between all of their children, but still be able to contribute to the lifestyle of a child during their lifetime. One way to ensure equal treatment, is to have the child, whom they financially helped during their lifetime, to sign a promissory note, promising to pay back the amount that they received by their parents during their lifetime. This way, if the debt isn't paid back before the parents die, it likely will be payable to the parent's estate and come out of that child's share. This method ensures simplicity, in that the estate plan need not be amended to discount inheritance every time a child receives a lifetime gift by the parents or indeed if the child repays the parents. Another option would be for the parents to do matching lifetime gifts to the other children.
Oftentimes leaving equal assets does not equal fairness.
In the above referenced situation, the parents may decide that fairness manifests itself leaving a larger inheritance for the child who is not as financially stable as his successful sibling.
A child may choose to act as caregiver for a sick or elderly parent, through which the parent would like to compensate the child by leaving him with a larger inheritance. The latter would be viewed by many as fair treatment.
In families where there is a special needs loved one, a larger inheritance via a special needs trust for the special needs child is viewed as fair. The reason for the latter is that, depending on the disability, the special needs loved one may not be able to engage in active employment and may not be able to develop meaningful relationships with people outside of the immediate family. In the latter situation, a larger inheritance may ensure that the special needs loved one’s needs are catered for and met by others apart from the devoted parents upon their passing.
Where a child has heavily contributed with time and effort into a family business, which may not have been registered or fairly reflected on their paychecks, parents leave them a larger inheritance, usually consisting of the business. Even if the child is fairly compensated for their time, the parents may want the whole business to go to the child involved, recognising their child's unique business mind, rather than making all the children equal owners. Other assets, such as life insurance and investment accounts, are then given to the other children to make the distributions equal.
No family is the same, and no two siblings are the same. Fairness between children can take many shapes and forms. Decide what is fair for your unique family situation and contact an estate planning attorney today to ensure your wishes are documented and honored.