As an estate-planning attorney, I have personally met with thousands of parents about how to avoid the probate process with a living trust. Over the years, the emphasis of my practice has changed from what estate planning documents are necessary to how to keep the family close even after the parents are gone.
Although there is an occasional “estranged” child that the parent has given up on, the overwhelming majority of parents wish that their children will remain close even after they are gone. Unfortunately, that’s often not the case. The courts are full of brothers and sisters fighting over their parent’s estate.
You might say, “I want to be fair — I love all my children equally.” The easiest definition of “fair” is equal. If your goal is to reduce conflicts between your children, then you should probably divide your estate “equally.” For example, if you have three children, you should divide your estate into three equal shares. But, sometimes, “fair” does not necessarily mean “equal.”
“Say what?” Quite often, depending on your circumstances, you don’t have to divide the estate “equally” to be fair. For example, if one of your children is disabled, he/she may need more resources to take care of himself or herself after you are gone. You might consider establishing a special needs trust for the disabled child’s care.
Or, you might have given one child gifts during your life. For example, you might have provided the down payment for a child’s home. To be fair, you could reduce that child’s share by the amount of that gift. Or, you might want to give a larger share to a caretaker child who has provided the most love, care and support in your latter years.
If “fair” is not “equal” in your case, here’s the big question — “Do you tell your children?”
That’s a very difficult question to answer. Short answer is — it depends on your children. I had one family that decided to leave the home to the son who still lived with the parents. He also provided the lion’s share of the love, care and support as the parents grew less independent.
The daughter, who lived out of town, already had a house of her own. So, the parents told the daughter their plans. The daughter got so upset that she stopped visiting her parents. In retrospect, it probably wasn’t a good idea to have told her. There are times you should keep it a secret until death. To avoid sibling resentment, you could write a letter to your children explaining the reasons for the unequal division.
On the other hand, it’s quite possible that your children might assume they will all get an “equal” share of your estate. Your children might be expecting to inherit a certain amount of money or property. They may even be making decisions right now based on those expectations, e.g., whether or not they need to purchase long-term care insurance.
There are times where the worst thing you can do is “blindside” a child after death. If you are leaving unequal shares, you could have a meeting where you talk about how you are leaving your assets. If they aren’t inheriting as much as they expect, it’s only fair to let them know the truth before you die.
The sad truth is — your children might judge how much you love them based on how much you leave them. If you are leaving unequal shares, you might ask the disgruntled child(ren) if they want sentimental gifts — and give them first choice. You can prevent disagreements between siblings after your death if you ask your children what they want.
It might be easiest to give sentimental objects away during your life, particularly if they aren’t worth much. Problems can arise if the sentimental gift is valuable. This is a major gift, which the other beneficiaries may resent. I once read that a good rule of thumb is: If a child gave that gift to the parent, that child has “first dibs” to get it back after your death.
If you have a trust, you can identify who gets what property using a separate “Memorandum of Special Gifts of Tangible Personal Property.” Make sure your attorney mentions the memorandum in your trust. If you don’t have a trust, hire a lawyer to help you keep your family out of probate court.
A lawyer can carefully analyze your estate and help you decide how to leave assets using appropriate testamentary vehicles, e.g., will, trust or beneficiary. A good lawyer can also help you decide how to divide your estate in a way that will help your children remain close even after you are gone.
Judd Matsunaga is the founding attorney of Elder Law Services of California, a law firm that specializes in Medi-Cal Planning, Estate Planning and Probate. He can be contacted at (310) 348-2995 or firstname.lastname@example.org. The opinions expressed in this article are the author’s own and do not necessarily reflect the view of the Pacific Citizen or constitute legal or tax advice and should not be treated as such.