Want to avoid property-related conflicts in your family? Watch how you divide your estate.
A new study by the National Bureau of Economic Research has found that more parents are now creating wills that treat their children unequally. Estate planning experts caution that this can lead to legal and family troubles.
The study discovered that between 1995 and 2010, the number of parents giving unequal estate favor among their children have more than doubled. In addition, 35 percent of parents currently plan to do the same.
According to study co-author Robert Pollack, a big reason for this increase is that more families are now complex. Parents may be favoring biological children over stepchildren, for example, or children from their current marriage over those from previous relationships.
Previous studies also suggest that parents may be giving bigger shares to help less well-off children or to pay for care and attention. Other possible drivers include the children’s varying levels of involvement, and the gifts that the parents may already have given such as paying for higher education.
Regardless of the parents’ intentions, the National Association of Estate Planners and Councils noted that an uneven estate split may lead to disputes among the children and the challenging of the parents’ will.
Siblings are primary players in almost half (44 percent) of will disputes, according to a 2014 survey by Seddons, a UK law firm. In 32 percent of the dispute cases, the claimants cited unequal distributions. In another 46 percent, the claimants said they did not receive what was promised to them, or that someone else took what was promised to them.
To keep familial rifts and legal challenges at bay, it is wise for parents to be careful in their estate plan. Drafting a will is a solid first step, giving thorough consideration on asset distribution and the division of possessions of sentimental value.
It is also crucial to communicate with the children themselves about what they want, what they may get, and the reasoning behind it. A good way to do this is by holding a family meeting at an estate planner’s office. Further, parents should be responsible enough to make their children aware of any changes in their estate plans.
