Overcoming an emotional response to planning your estate gets complicated, if you want to leave uneven distributions of your property to loved ones, including children and spouses. There are a lot of reasons for this, but the reasons don’t make it easier, explains the article “Distribution of estate can become a tricky matter,” from the Kentucky newspaper, The News-Enterprise.
Every family has its dynamics. Children may be estranged from parents, or one adult child may have given up her own career to care for her parents. There may be one child who received a large amount of support throughout his lifetime and a parent wants to give other children more of their estate. Whatever the reason, whenever there is an unequal distribution, there is a strong possibility of an estate being challenged. Plan wisely when leaving substantially different amounts of property between beneficiaries. (And that includes by beneficiary designation!)
Some people make the mistake of trying to simplify matters, by adding a codicil or an amendment to an existing will. This could open the door to a will challenge, since it raises a red flag to heirs, declaring that at one point they were going to receive one amount, but a change was made. Even in the absence of a contested action in court, a red-flagged change could lead to quarrels between heirs and the executor of the estate. For siblings, the change could cost the family more than their inheritance: it could lead to a family fracture.
If new documents are created, it is important that they be as specific as possible with regard to property bequests and the distribution of the assets in the estate. If the goal is to bypass a particular child, but there is no wish to disinherit future generations, the will must contain language stating that there is no wish to disinherit the descendants of the individual.
For some families, discussing the intentions with the heirs beforehand can avoid surprises and misunderstandings after you have passed. However, not every family enjoys healthy relationships. In those cases, a letter of explanation may be helpful to show intent, explain that there was consideration given to the unequal distribution and that it did not happen as the result of an oversight. (But make sure that note isn’t construed to be your will!)
Lifetime advances, where you gift an inheritance before you die, can get tricky. The same is true with creating a will that gives beneficiaries certain percentages in an effort to even things out, especially if a loan has been made. Unless you plan on updating your will every time a beneficiary makes a repayment on a loan, it’ll be hard to be sure that your wishes will be fulfilled when you pass.
A better plan may be to leave each beneficiary the amount you want and include a provision for repayment of any loans based on their inheritance. This can be done with a promissory note and by keeping meticulous records of payments made, so there is no need to update your bequest every time the loan amount changes.
Whatever your family’s situation, chances are good that your estate planning attorney has seen the situation before and will be able to discuss different options to achieve your ultimate goal. Don’t be tempted to take a short-cut—it could lead to larger problems that erode your estate’s value, defeating your intentions and impacting your legacy.
Reference: (Kentucky’s) The News-Enterprise (Sep. 8, 2020) “Distribution of estate can become a tricky matter”