We’ll discuss each portion bit by bit so that at the end you will be able to decide for yourself if you want to divide your assets equally or fairly.
Your Last Act of Love
You might look at your Will and take it for granted. Or you might see it as a simple document meant only for asset distribution. But Wills are far from that; it’s not an empty piece of paper used just for stating what happens to your wealth, it’s your last letter to your loved ones. And the inheritance you leave behind to your children will be your last present to them. So, it’s best not to believe in that false philosophy that the inheritance you give doesn’t equate to your love for them. From your standpoint, it doesn’t measure your love, but for your children, it basically is, especially if you have never been vocal or expressive in your love towards them. You wouldn’t want your child to feel unloved, do you? Or worst, you wouldn’t want them to end up resenting you after you’re gone. Remember, you won’t be there to tell your child that you love him or her when she finds out what you wrote in your will. Take that all into account, you can’t defend yourself! And your empty words in your will cannot make up for the emotional devastation it might cause to the family you leave behind.
It’s crucial that you understand what impact your children’s inheritance will have on their lives, from their point of view, not yours.
Dividing Children’s Inheritance Equally or Fairly?
How to divide your children’s inheritance fairly? How to divide your children’s inheritance equally? These two questions can be pesky questions that bother you at night, disrupting your sleep or cause you to toss and turn at night. If you’re young, you won’t be worrying about these questions yet, but when you’re old and ailing, these questions pop into your head more often than you like.
What happens when you divide equally?
Children’s inheritance divided equally means each of your children gets the same amount of money or asset. If you have three kids, then each child will receive the same amount, if one child gets $100,000, then the other two also get $100,000. If one child gets a house worth $300,000, then the others should have a house with the same worth.
Making this fair inheritance division can be hard especially if the properties you own are not worth the same. In order to divide properties equally, you need to do careful planning. If a house you gave for your eldest is worth $250,000, and the house you gave to your youngest is worth just $120,000 you can make their inheritance even by giving your youngest other assets worth $130,000.
Now, What happens when you divide fairly?
Fairly and equally are different. Take a look at this example to understand why we say it’s different. You have three children, the eldest lives in the States, the other in Hong Kong and your youngest lives in Singapore. Now, you have three properties, one in Miami, the other in Hong Kong and last is your house in Singapore. Dividing fairly means that you will divide your properties according to their needs and preferences. If you divide your properties fairly, you might consider giving it away based on their location. Your eldest is already in the States so you might consider giving him/her the house in Miami, your middle child lives in Hong Kong, so it’s natural for you to give the Hong Kong property to him/her. And as for your youngest since she lives in the country then you can give it to her/him. The basis for your decision in handing out your property is not based on being equal but based on your children’s convenience.
The arrangement above can change. Let’s say your eldest plans to stay close to you and is fond of your house in the country; then you might consider giving the house to him/her. Your youngest plans to live in the US, and you want to make sure she/he has a place there so you could give your Miami house to him/her. Lastly, your middle child who has a house already needs more investment in his business. You could consider selling the house in Hong Kong and give him the financing he needs.
How to divide inheritance fairly shouldn’t a hard question to answer, you base your decisions on what you think is fair to your kids. Most estate planners recommend dividing your children’s inheritance fairly instead of equally. The reason for this is, first it is more convenient on your part, and second you are basing your decision on their needs and preferences.
Understanding the Psychology that Goes into Inheritances
Remember when we said your children’s inheritance is your last act of love? And that you should not take it lightly and give it without planning and thinking? Here’s why.
The measure of your love
Okay, we hear you complaining that it’s not, but from your child’s point of view, it is. They view the child that got more as the child you loved and favoured. And worst they feel unloved and unappreciated. You could argue that it’s not but remember your point of view doesn’t matter here because you’re gone, and no one can explain to your hurting child that you love him/her equally the same. Even if you explain it to your will, your actions speak louder than words, and those actions are what truly shows your feelings, not your words. Take a look at the example below.
A mother of two decides to leave everything she has to her youngest child who is a teacher and nothing to her son who is a doctor. Her reasoning is, her daughter needed the money more because she earns less and now has money problems. How do you think her son reacted? Did he jump for joy because he got disinherited?
The son’s reaction was he got angry, furious even and told his mother “I have done everything you asked of me, got into a good medical school, became a doctor, but now you disinherited me?!”
Wrong move for the mother, she ended up amending her will leaving more to her daughter, but the damage has been done. By her actions she made her son feel unloved and unfavored. Her actions spoke louder than her words. Let’s face it her actions were not fair, and they weren’t equal! She only succeeded in hurting her son’s feelings, the son who did all that she asked.
- Don’t disinherit your kids – Don’t leave them out of your will just because you believe they don’t need any inheritance from you. If they told you that they don’t want to get anything then, take them out of your will, but even in these cases, you can still leave something to them. And just because their spouses are wealthy doesn’t mean that they are, imagine what would happen if their spouses divorce them, how would they get by?
- Explain your actions while you are alive – Tell them why you are dividing your assets that way. Why your youngest gets more, or why he/she gets less in a kind way and not in an imposing way.
- Ask for their opinions – following a democratic approach can save your family from nasty aftermaths. Ask them want they want, and listen to their opinions if they are old enough to make one. If they are not then base your decisions on their preferences and needs, but if you can find a way to be equal then do so.
Seeing The Aftermath
Your failure to determine whether to equally divide or fairly divide will result in your other children who felt wronged to take legal actions. You end up destroying the good relationship between your children and end up losing your kids love and respect. 70% of family inheritance is lost because of legal battles between heirs. As a parent, this is something you want to avoid and even prevent. You can only do so by making a carefully planned estate plan and a well-thought-out will.
Your children’s inheritance means a lot more than just material possessions. It can affect how they view you and your love towards them. But, most importantly it can determine the future of your children’s relationship with each other. It will be the primary factor that determines whether they become the symbol of family love and cooperation, or if they will make it to the front page of every news outlet for harsh legal battles over whatever estate you leave behind.