Dividing up your estate among offspring can be a tricky business. Remember that not having a will is the height of irresponsibility. The task must be faced.
There are many situations in which the obvious option—an equal division of assets among children—is the right choice. However, in some families, giving each child an identical inheritance might not make sense. As estate planning attorneys point out, there is a difference between leaving an equal inheritance, where each child receives the same amount, and an equitable inheritance, where each child receives what’s fair, given their circumstances. So when does it make sense to leave each of your children the same inheritance, and when does a different arrangement make more sense? And how might each choice affect sibling harmony and whether your wishes are carried out as you intended?
• Dividing up your estate in an equal way between your children often makes sense, especially when their histories and circumstances are similar.
• Equal distribution can also avoid family conflict over fairness or favoritism.
• Equal distribution, however, may not actually be equitable distribution, especially when some children have been favored financially in the past over others, or some are in tougher financial straits.
When to Assign Equal Amounts
If there are three children, an equal split obviously means each will get one-third of the remaining estate after both parents have passed away. It makes sense for each child to get the same inheritance when each child has similar needs and is similarly situated in life, each child has received similar support in the past from their parents, and each child is mentally and emotionally capable and responsible. For example, if your children have all completed college (with you paying their tuition) and no longer rely on you for financial assistance, if no child has a disability or serious illness, and if all have demonstrated that they’re responsible with money, it’s logical to divide your assets evenly among them. If your bequests include real estate and other tangible assets, you will need to determine the dollar value of each asset and decide what makes the most sense to leave to each child. Consider the common situation in which children are scattered across the country.
If one child always loved the primary house in Spanish Fork and still lives nearby, it could make sense to bequeath it to him or her. Another child, who lives in Florida, could inherit the beach house in Boca. “Any differences in the values of the properties could be made up in cash or other assets.” There are also less pleasant reasons to leave an equal inheritance, even if you feel one or more of your children don’t deserve it: Doing so can help avoid the costs of conflict, both emotional and financial. Merely from a litigation standpoint, the best way to decide is to weigh the likelihood of a child dragging an estate through litigation. A lawsuit is financially and emotionally draining for your family and for your estate, and will cause some of your assets to end up in a different place than you had hoped—in lawyers’ pockets.” If your will is contested after you die, some of your assets will go into the pockets of lawyers instead of your heirs.
When to Assign Different Amounts
Leaving each child an equal piece of the pie doesn’t always feel right. Perhaps one of your offspring is acting as your caregiver, and you want to reward them for that devotion or make compensation for lost time and wages. Or, perhaps, you’ve given one child considerably more money during your lifetime than you’ve given to another, say, $50,000 for a wedding, grad school, or a down payment on a house. In this scenario, if you would otherwise leave your two children equal inheritances of $200,000 apiece, you might instead leave $175,000 to the child you previously gifted money to and $225,000 to the child you didn’t. This distribution follows the equitable, not equal, guideline.
If you have a child who cannot care for themselves, you may want to leave most of your estate to provide for that child’s care through a special needs trust. A child with a disability may need income support to meet basic living expenses and funds to pay for ongoing medical needs. Siblings will likely understand such a situation and not be offended by receiving less money, but it’s still a good idea to let them know your plans, so there are no surprises after your death. You might decide to bequeath disparate amounts when you have a blended family, with one child who can expect to continue receiving support from another parent. You might also do this when you run a family business and one child has a larger ownership share than another, or when one child is financially irresponsible. The overall guideline should be the promotion of family harmony. It is unbelievable how many families fall apart after the parents die because of how the estate is divided up.
Could a Child Sue for More?
If you decide not to divide your assets equally among your children, understand that you’re putting your plans and your children at risk of going through a lawsuit. How significant is this risk, and how likely is it that the result will be a different division of assets than the one you desired? Children can sue to contest a will, but with careful estate planning, you can help mitigate challenges. The first step is to draft your will with the assistance of an estate planning attorney while you’re of sound mind and memory and without undue influence from one of your children. “Undue influence” means that one of your other children believes or at least thinks it can be proved in court that you were manipulated during the process of creating your will. As a result, that child contends, you expressed wishes that you otherwise wouldn’t have or that weren’t really what you wanted. You won’t be there to defend yourself against such a claim, so you need to make sure no one can successfully argue it.
“Lack of capacity,” another way a will can be challenged, means that you didn’t understand what you were doing when you created or changed your will, perhaps because of your age or because a physical or mental illness had eroded your ability to make sound decisions. A child could also try to argue that your will isn’t valid because of fraud or because your signature wasn’t witnessed. A no-contest clause, which stipulates that anyone contesting the will forfeits their inheritance, can be used to discourage any legal challenges.
How to Protect Your Wishes
There are ways to minimize the chances of a less-favored child contesting your will in court, as well as ways to minimize that child’s chances of winning if they do. A no-contest clause paired with at least some nominal gift can create a disincentive to challenge. A non-contestability clause is, basically, language in your will stating that any inheritor who takes your will to court forfeits any bequests. That’s where the nominal gift comes in for the clause to be effective; your child has to have something to lose. You’ll need to leave the less-favored child enough that they likely have more to gain by keeping quiet than by going to court. It’s an unpalatable option, to be sure, but it might mean the best chance of keeping your will intact. The enforceability of these clauses varies by state, however, so check your state’s laws before considering this option.
Estate-planning experts say other ways to avoid challenges to your will include the following:
• Using a trust to provide structure for a child who might not be able to manage an inheritance responsibly on their own.
• Having your doctor be a witness when you sign your will to invalidate claims of lack of capacity.
• Excluding all children from the will-writing process to invalidate claims of undue influence.
• Discussing your will with each child to avoid surprises and explain your reasoning.
A lawsuit of this type is most likely to end in a settlement. Settlement will in some way vary your estate plan, because funds will likely end up in a different place or with a different person than you had hoped. The most important thing to remember when dividing up an inheritance is that it is your money, and you have a right to do with it what you choose.
Tips to Help Siblings Avoid or Resolve an Estate Battle
Sibling disputes often erupt after a parent dies, and it’s time to divide up the assets of an estate, and these fights can result in lengthy and expensive legal actions. However, a little forethought from parents can avoid such disputes, or they can be addressed by siblings who employ savvy strategies after a parent or both parents die. Consider the following to prevent or resolve conflict.
• Sibling disputes over assets in a parent’s estate can be avoided by taking certain steps both before and after the parent dies.
• Strategies parents can implement include expressing their wishes in a will, setting up a trust, using a non-sibling as executor or trustee, and giving gifts during their lifetime.
• After a parent dies, siblings can use a mediator, split the proceeds after liquidating assets, and defer to an independent fiduciary.
• Parents and others may gift each child up to $15,000 (2021) and $16,000 (2022) without owing taxes on those gifts.
• Using a mediator after a parent dies may be useful when emotions are running high among siblings.
Estate-Planning Steps for Parents
Planning before death can address many of the issues that arise after a parent dies. Perhaps the most important action a parent can take is to have a will that specifies which sibling receives what in terms of property. Who inherits the house? A business? A valuable painting? The answers can be spelled out in a will.
Alternatively, a parent can give directions that the house is sold and the proceeds divided evenly. If a parent wants to leave one sibling out of the will, this is legally permissible. There is no rule on disinheriting a child. However, to avoid legal challenges by a disinherited sibling, a parent should consider discussing the matter with the child or explaining the reason in the will. Another good practice is to use a trust to specify property dispositions after death. A parent can make a revocable trust that can be changed at any time up to death, assuming the parent remains competent. Putting property in the joint name of a parent and child so that the asset passes automatically to the child when the parent dies is another way to avoid conflict. This can be done, for example, for a bank account, brokerage account, or real estate. Using a non-sibling executor or trustee for the estate can also help keep the peace. A third party who does not stand to gain from any decisions regarding property distributions may be a good idea, particularly if a parent believes there could be sibling disputes after they die.
How Parents Can Divvy Up Minor Items
Disputes over a treasured but valueless picture can cause bad feelings within the family, and those bad feelings can persist for a long time. A wise parent who anticipates that siblings may quibble over the household or other minor items after they die can take specific steps to thwart any problems.
Give Gifts During Lifetime
A parent may want to disburse certain items before they die so that a child can enjoy the items longer—this avoids claims to them after the parent dies. For example, if a parent has two daughters, the parent might give rings, bracelets, and necklaces to each, perhaps as birthday or holiday gifts. This gifting strategy assumes that the value of the items is below the annual gift tax exclusion. In 2021, the annual exclusion is $15,000 and in 2022 it goes up to $16, 000. This means that tax filers can give away up to $15,000 or $16,000 per person without paying tax on those gifts. Items of greater value require that a gift tax return be filed and may entail gift taxes.
It may sound tacky, but putting tags on certain essential items, such as a lithograph or first edition book, can be helpful. The label should name the sibling who will inherit the thing after the parent dies. While the tag does not create a legal requirement that the sibling receives the item, it is indicative of the parent’s intent and may go a long way in avoiding sibling spats.
Write a Letter of Instruction
A letter of instruction can be written by the parent outlining who gets what. Again, the letter is not legally binding but serves as a roadmap to the parent’s wishes regarding their property.
What to Do After a Parent Dies
If a parent did not take action before death, and there is a possibility of problems over distributing assets, it’s not too late to preserve sibling harmony or at least to minimize bad feelings. There are actions you can take to mitigate sibling strife.
Use a Mediator
When there is a serious problem involving a family business, a professional mediator can help. Bring all the siblings together and work with the mediator to reach a consensus.
When siblings lay claim to the same assets and cannot agree, one option is to sell the assets and split the proceeds.
Defer to an Independent Fiduciary
Siblings can decline an appointment as executor or trustee so that someone else can be the fiduciary and make decisions on asset distributions. If siblings are named as fiduciaries, they need to formally decline the appointment. This step should only be taken if the siblings agree on the appointment of the person who will act as fiduciary—whether this is another person in the family, an attorney, CPA, or a bank’s trust department—and if the estate can afford the payment for this service.
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It’s not a matter of if, it’s a matter of when. Legal problems come to everyone. Whether it’s your son who gets in a car wreck, your uncle who loses his job and needs to file for bankruptcy, your sister’s brother who’s getting divorced, or a grandparent that passes away without a will -all of us have legal issues and questions that arise. So when you have a law question, call Ascent Law for your free consultation (801) 676-5506. We want to help you!
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Spanish Fork, Utah
“Pride and Progress”
|Coordinates: 40°6′54″N 111°39′18″WCoordinates: 40°6′54″N 111°39′18″W|
|Incorporated||January 17, 1855|
|Named for||Spanish Fork (river)|
|• Total||16.21 sq mi (41.98 km2)|
|• Land||16.21 sq mi (41.98 km2)|
|• Water||0.00 sq mi (0.00 km2)|
|Elevation||4,577 ft (1,395 m)|
|• Density||2,600/sq mi (1,000/km2)|
|Time zone||UTC−7 (Mountain (MST))|
|• Summer (DST)||UTC−6 (MDT)|
|Area code(s)||385, 801|
|FIPS code||49-71290|
Spanish Fork is a city in Utah County, Utah, United States. It is part of the Provo–Orem Metropolitan Statistical Area. The 2020 census reported a population of 42,602. Spanish Fork, Utah is the 20th largest city in Utah based on official 2017 estimates from the US Census Bureau.
Spanish Fork lies in the Utah Valley, with the Wasatch Range to the east and Utah Lake to the northwest. I-15 passes the northwest side of the city. Payson is approximately six miles to the southwest, Springville lies about four miles to the northeast, and Salem is approximately 4.5 miles to the south.