Many people use their estate plan to make equal bequests to their heirs and beneficiaries. A person with $3 million and three adult children may simply leave 1 million to each and allow them to do with it as they wish. The specific financial value of the asset isn’t as important as the fact that it is being divided evenly. This is often done at any income level. Many elderly parents focus on the goal of equality.
But don’t assume that your estate plan has to accomplish the same aim. In fact, some reports have shown that unequal bequests are becoming more and more common. They used to be very infrequent, but they doubled in use between 1995 and 2010, and they are now featured in roughly 35% of all estate plans.
Why might unequal bequests be used?
There are both positive and negative reasons for ordering unequal bequests. A negative reason could be if an adult child has become estranged from their parents. Maybe they had a falling out and moved away. The parents still want to leave them something, but it will be less than their more-connected siblings receive.
But a more positive reason could simply be that one adult child is doing very well financially, so the parent thinks it would be more beneficial to leave a larger inheritance to other siblings who need it more. The parent is focusing on what they think is fair and helpful, even if that doesn’t mean that their approach serves the goal of equality.
Can unequal bequests cause any problems?
Although unequal bequests are legal and widely used, but they can lead to problems like estate disputes. A parent may think that dividing things unequally is a bit fairer, as noted above, due to the financial success of specific beneficiaries, for example. But what if the less-favored beneficiary thinks that their other siblings actually used undue influence to get more of the inheritance for themselves? Heirs often get into disputes about what their parents really would’ve wanted – did they really intend to make things unequal, or was there some other reason for the discrepancy?
These are just a few of the complexities of estate planning in the modern age. Those who are working through the process need to know exactly what legal steps to take to preserve their interests, minimize the risk of disputes, and plan their estates successfully.