Finding the right estate plan might not be easy. More often than not, parents who are preparing for the time after their death seek a will, estate plan, and inheritance agenda that treats each of their children equally, benefitting every son and daughter in the fairest way. However, given the complicated variety of forms that one’s assets can take, dividing each holding into exactly equal fractions may not be the best method.
The need for the right, comprehensive plan is most vivid in situations which involve a valuable family business-one that contains sizeable value and equity, but may not interest or involve all one’s children. With so many California citizens owning their own business, proper preparation for passing on their holdings is absolutely essential.
The fairest, most equitable estate plan is one that recognizes each child’s needs and allocates portions of the estate to the beneficiary who will be able to best utilize them. If one or some children have a marked stake in the family business, while others are neither involved nor interested, splitting that business’s capital, equity, and other frequently illiquid assets into equal parts can lead to dispute, resentment, and a weakened business after you’re gone.
Children involved in the business may resent the others’ new stake in the enterprise, while those with little or no previous ties may question their siblings’ right to salary, dividends, and other assets you’ve left behind.
Looking realistically at which assets should be left to which children is the best way to head off any disputes or uncertainty after the funeral. The right estate plan that keeps the business in the hands of those children most closely involved, while bequeathing life insurance, stock portfolios, and cash assets to others, is sure to lessen the amount of contention amongst siblings. More importantly, such a plan will provide the most usable good for each child, leaving the kids with a more equitable amounts of wealth, even if the numbers aren’t necessarily equal.
Each family must decide for themselves the best way to prepare for the moment of inheritance, and no two estate plans are a best-fit for different households. However, nothing can be more problematic than leaving the planning process to the kids after death. Working with the right estate planning attorney can eliminate future dispute, safeguarding the road to fairness and equity.
Source: Forbes, “Inheritance Equalization: Planning ahead now to reduce the burden for your kids later,” Steve Parrish, Jan. 16, 2013
• Our firm can help in the work of adjusting and allocating the estate for future generations. For more information, contact our Ventura County estate law page.