What is “Fair” When Dividing Your Estate?
I find that one of the most difficult topics that arises in estate planning discussions is the concept of ‘fairness’. This is particularly true when parents are trying to figure out how to divide up their estate amongst their children. At first glance, it would seem obvious – all children should benefit equally – that is what fairness is – the Solomon-like approach to estate planning. Unfortunately, there are contributing factors that can make an even distribution appear, to some, to be unfair:
Needs of a child: Parents will often have a disparity in the financial wellbeing of each of their children. Those differences can come as a result of one or more factors, some of which are: education choice, career choice, the choice to have children (grandchildren to the testator) and the number of grandchildren, a marriage gone bad, a spendthrift child, a spendthrift spouse of a child, health challenges, etc.
Gifts to the children: Parents will often provide support in varying amounts to different children – offsetting school expenses, buying or giving a car to a child, help with medical or caregiving expenses. In some cases the variations can be stark – sometimes there is one child who has benefited significantly more than the other children.
Caregiving or other support to the parent by one of the children: There is often one child, usually the child who lives nearby the parents, who takes on the lion’s share of day-to-day support for the parents – buying food, preparing meals taking the parent to medical and other appointments, laundry, cleaning house, etc. This has become even more true with the onset of COVID, and elderly parents relying on one child to bring all they need to them, in order to keep them safe – but this situation existed long before COVID and will continue long after.
Construction or Maintenance assistance: This is so often true with a cottage (but can be with a house too) – that one child in particular will have spent considerably more time than the others (availability of time, skill set, enjoyment, or sense of duty, perhaps) in doing ‘projects’ around the cottage/house.
In the end, I find there are three factors which, through discussion, I help my clients consider in making this kind of decision: the first is how the clients ‘feel’ about an unequal division. Some parents can’t stand the idea of making an unequal division – their feeling is that whatever has happened during their lifetimes has happened, they have had freedom of choice, and so have the children, and so on death everything should be equal. Others feel quite differently, and want to recognize and distribute based on recognition of one or more of the above factors. Neither concept is wrong – but I am sure that as you read this, you will believe that one approach is correct and the other is not – it will usually depend on your own experience, or moral beliefs. My job is not to past judgment, but rather to reflect back to the parents the meaning behind what they are suggesting, and help them to reach consensus about what THEY wish to do.
The second factor is the perspective of the children. Again, there are parents who don’t care what the children think, and want to focus on what they believe is fair, regardless of how the children will react. Other parents are very concerned with the relationships amongst their children, both before and after they die, and how what they do in their will is likely to affect those relationships. There is no right answer or wrong answer – so much depends on the nature and personality of the children, even more than that of the parents, which I find often affects the approach which the parents take.
The third factor is legal (I am a lawyer after all!): How can the will be challenged? Parents can become very concerned about the ability of a child to challenge their will, based on arguments of capacity, undue influence, or the failure to provide for a dependent (a child to whom a parent has provided support, directly or indirectly). We do look at the risk of legal action, and that is often a factor which will affect how the parents treat their children in their will.
All in all, what is fair is a moving target, altered by perception of parents and children. What is difficult to accept, but important to realize, is that the control over the contents of a will is ultimately rests with the parents, and the parents have a right to dispose of their estate as they wish.