A married couple who read the column is nearing the age
at which they say they want to get their financial affairs in order, including
deciding how they will leave their assets to their three children after the
couple dies.
When they drew up their will several years ago, they
planned to split their assets equally among their three children.
"But each child's circumstances have changed
considerably," the husband writes.
The couple is financially helping out one child and his
family because of that child's poor health.
Another child, however, is in good financial shape with a
great job and good pension.
"Our third child and family are doing quite well in
good part because of our involvement in assisting them in some business
dealings."
The parents are torn between leaving their will as is, or
apportioning their children's inheritance according to their needs.
"We don't want to be unfair to any of them,"
writes the husband, "but the one with the least income and poor health can
certainly use more money than the others."
The couple estimates that the total inheritance will be a
little more than $1 million.
"My wife and I are both getting to an age where we
must make a decision regarding this matter soon," writes the husband.
"I'm sure we are not alone in trying to solve this sort of thing. But we
don't really know who we can discuss it with."
There are financial professionals who advise on wills and
estates. But the couple already knows who to go to for a will. The problem is
trying to sort out the "fairness" of whatever choice they make.
They are certainly not alone. Many couples wrestle with
how to allocate their assets after they die. While it's often possible to leave
equal shares of whatever assets there are to any surviving children, there are
sometimes mitigating circumstances that cause parents to wonder about the best
thing to do.
Some parents who've loaned one child and not others large
sums of cash and have never been repaid, for example, decide to deduct that
amount from that child's share of an inheritance. If one child provided primary
care for an ailing parent, there are occasions when parents decide to leave
that child a bit more.
Leaving equal shares might be the simplest thing to do,
but since the money belongs to the parents, they have every right to allocate
it however they wish. They also have every right to spend as much of the money
as they wish (or all of it) before they die.
If they do decide to leave more money to the child with
significant health issues, the right thing to do is discuss their plans with
all three children. There's no requirement that they do this, but if they truly
care for their children and want to avoid creating ill will among them after
the parents' deaths, discussing how the assets will be divided before the time
comes is the best way to handle the situation.
Jeffrey L. Seglin, author of The Right Thing: Conscience, Profit and Personal Responsibility in Today's Business and The Good, the Bad, and Your Business: Choosing Right When Ethical Dilemmas Pull You Apart, is a lecturer in public policy and director of the communications program at Harvard's Kennedy School.
Follow him on Twitter: @jseglin
Do you have ethical questions that you need answered? Send them to rightthing@comcast.net.
(c) 2014 JEFFREY L. SEGLIN. Distributed by TRIBUNECONTENT AGENCY, LLC.
2 comments:
My parents have given different amounts to each of their 3 grown children. Downpayments on homes, remodel costs, college of grandkids. They have just kept track of all of those 'gifts' and each 'gift' will be deducted from the third of the estate that was going to that child. We, unlike the example, don't have radically different lifestyles, just very difference places in our lives. Youngest child still has kids in grade school. Eldest has kids married with grandkids. And middle has kids in college. Equal shares minus any 'gifts' is just easier than trying to guess who will need more when you die.
Left unsaid in this dilemma is no mention is made of the kind of relationship the 3 children have with the parents or each other and whether or not, if the parents were to leave the needy child more money than the "well-fixed" children, what would be the feelings involved? In other words, would either of the children who might possibly get less inheritance, get their feelings "hurt" by this arrangement. It's the parent's money - they should distribute the inheritance as they see fit, keeping the circumstances as described in mind. They owe no explanation to the children.
Charlie Seng
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