NerdWallet: How to avoid potential conflict among your kids when leaving an unequal inheritance

by | May 4, 2023 | Stock Market

This article is reprinted by permission from NerdWallet.  For many people, one of the key steps in estate planning is making sure their children are treated fairly when it comes to inheritance. But “fair” doesn’t always mean “equal,” especially if your family situation or assets are complicated. In some circumstances, giving kids equal inheritances may not be the best option.

Equal inheritances have actually become less common, in fact. According to data from the University of Michigan’s Health and Retirement Study, the proportion of parents over 50 who reported treating children unequally in their wills rose from 16% to almost 35% between 1995 and 2010. Leaving unequal inheritances can be a risky move, though. According to a 2018 Merrill Edge Report, 1 in 3 Americans say their financial stability depends on receiving an inheritance. The stakes can be high for siblings — and their parents.When to leave an unequal inheritance Although it can be simpler to split your assets evenly among your beneficiaries, you might feel strongly about helping an adult child who is struggling, or maybe you want to leave less to a child you’ve already financially supported. Perhaps you want to set up a trust for a child with functional needs or give more to an adult child who has children of their own. One of the most common reasons people leave unequal inheritances is to address uncompensated caregiving from an adult child. In a 2018 study by Merrill Lynch and Age Wave, two-thirds of the respondents said that children who have provided care to them in their later years should receive a larger inheritance than those who did not. Attorney Susan H. Levin, who specializes in elder law and estate planning at Rosenberg, Freedman & Lee in Newton, Massachusetts, says that when a child has had to compromise their lifestyle to take care of a parent — such as giving up a job or working part time instead of full time — the parent understands the sacrifice and often wants to favor that child with the inheritance. According to the Merrill Lynch and Age Wave study, many parents also feel that children wh …

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