elderly talking to financial consultant about emotional challenges

Emotional Challenges to Leaving Unequal Amounts to Children

When it comes to leaving an estate to one’s children, “equal” is not necessarily the same as “fair.” No matter what choices parents make, the emotions involved in their decisions are complicated. The emotions for surviving children can be even more complex.

I don’t often see an estate plan that treats children unequally. When I do, typically it’s because a parent is estranged from a child and leaves them nothing. Otherwise, the default choice is commonly to divide everything equally among children. It is seen as the best way to minimize rivalries, reduce the potential for hurt feelings, and help enhance siblings’ relationships after the death of the parents. It seems like the obvious way to treat kids fairly.

One situation where this doesn’t work is if the kids have not been treated equally in terms of money during the parents’ lifetime. If parents have given more financially to one child over the years, it’s usually a good thing to level that playing field at death if the goal is to treat all children equally. Some common examples of unequal treatment include:

  • Paying for one child’s education but not another’s. 
  • Giving money to a child to start a business or buy a home.
  • Bailing out one child who has financial struggles—either self-inflicted or caused by outside circumstances. 
  • Parents feeling they owe more to a child who has taken care of them in their old age. 

Whatever form the financial inequality takes, the result is an emotional impact for everyone involved. Both a child who has received more and a child who has received less may feel such emotions as guilt, gratitude, obligation, a sense of entitlement, inadequacy, anger, or resentment. Those emotions can affect the family both during and after the parents’ lifetimes.

It’s not uncommon for parents to avoid dealing directly with the emotions but to try to make things more equal financially in their estate planning. One strategy for this is to subtract any excess funds paid to a child in their lifetime from their portion of the inheritance. This typically goes over pretty well. Just a side note: It’s important to adjust that amount for inflation. If you gave a hundred thousand to a child 20 years ago and you’re adjusting for it today in your will, you’ll want to inflate that amount so its purchasing power is equal to a hundred thousand in today’s dollars.

Other circumstances may require more complex strategies. One example is a situation where one child has received more lifetime financial help from the parents and also seems likely to need such help after their deaths. I once worked with a client couple who had four children, three of whom were very successful financially. The youngest, however, had struggled with mental health issues and addictions, had been in and out of jail, and found it difficult to hold a job. The parents held a wide range of emotions around their estate planning: love for all their children, pride in the three who had done well, guilt and anxiety and concern for the one son who had not. 

They felt it necessary and important to provide basic support for him, yet believed that any money left to him outright would be gone quickly. Two ways to provide ongoing support would be to leave his share in trust or to direct the executor to use it to purchase a single premium annuity that would provide a monthly income. A problem with either was that one-fourth of their estate would not provide enough income for him to live on. Nor would a one-fourth share make any real financial difference for the three successful children. 

Leaving the entire estate to the youngest son was an option, but they were concerned about hurt feelings among the other siblings. They realized the worst thing they could do was leave everything to him and avoid any difficult conversations by not telling the children their plan. This is the kind of estate plan that can lead to deep hurt and resentment, lawsuits, and lasting family divides. They were clear that they wanted to discuss the estate plan with the children in advance.

They eventually found a solution that came the closest to providing fairness, addressing the siblings’ emotions, and providing adequately for the youngest son. Both parents thought the three successful siblings would agree that leaving the full estate to their brother made logical sense. They also realized that it was quite likely for them to agree, while at the same time feeling some resistance to that plan and not voicing their resistance. Parts of themselves might well feel angry to see their brother rewarded for his poor life choices while they were penalized for their successful ones. It wouldn’t be unusual for them to shame themselves for even feeling such emotions.

The parents’ solution was to leave the estate equally to all four children, with the youngest son’s share in trust, with an added provision: that if any of the other three chose to disclaim, or refuse, their inheritance, it would pass to the trust. This gave them a choice. Of course, this arrangement might still cause tension among the siblings. Yet the parents and I agreed that this arrangement probably solved more problems than it created. It was the best available option to navigate the emotions that can make estate planning such a challenge.

Check out The Financial Therapy Podcast by Rick Kahler concerning this topic.

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