Can You Distribute Unequal Amounts in an Estate Plan?

For most of us, considering the distribution of the property we have accumulated over our lives is a painful reminder of our mortality.

Can You Distribute Unequal Amounts in an Estate Plan?Overcoming an emotional response to the necessary task becomes complicated, when we want to leave uneven distributions of our property to loved ones, including children and spouses. There are many reasons for this, but the reasons don’t make it easier, explains the article “Distribution of estate can become a tricky matter,” from The News-Enterprise.

Every family has its dynamics. Children may be estranged from parents, or one adult child may have given up her own career to care for her parents. There may be one child who received a large amount of support throughout his lifetime and a parent wants to give other children more of their estate. Whatever the reason, whenever there is an unequal distribution, there is a strong possibility of an estate being challenged. Plan wisely when leaving substantially different amounts of property between beneficiaries.

Some people make the mistake of trying to simplify matters, by adding a codicil or an amendment to an existing will. This could open the door to a will challenge, since it raises a red flag to heirs, declaring that at one point they were going to receive one amount, but a change was made. Even in the absence of a contested action in court, a red-flagged change could lead to quarrels between heirs and the executor of the estate. For siblings, the change could cost the family more than their inheritance: it could lead to a family fracture.

If new documents are created, it is important that they be as specific as possible with regard to property bequests and the distribution of the assets in the estate. If the goal is to bypass a particular child, but there is no wish to disinherit future generations, the will must contain language stating that there is no wish to disinherit the descendants of the individual.

For some families, discussing the intentions with the heirs beforehand can avoid surprises and misunderstandings after you have passed. However, not every family enjoys healthy relationships. In those cases, a letter of explanation may be helpful to show intent, explain that there was consideration given to the unequal distribution and that it did not happen as the result of an oversight.

Lifetime advances, where you gift inheritances before you die, can get tricky. The same is true with creating a will that gives beneficiaries certain percentages in an effort to even things out, especially if a loan has been made. Unless you plan on updating your will every time a beneficiary makes a repayment on a loan, you will never be sure that your wishes will be fulfilled when you pass.

A better plan is to leave each beneficiary the amount you want and include a provision for repayment of any loans based on their inheritance. This can be done with a promissory note and by keeping meticulous records of payments made, so there is no need to update your bequest every time the loan amount changes.

Whatever your family’s situation, chances are good that your estate planning attorney has seen the situation before and will be able to discuss different options to achieve your ultimate goal. Don’t be tempted to take a short-cut—it could lead to larger problems that erode your estate’s value, defeating your intentions and impacting your legacy.

One of the main goals of our law practice is to help families like your plan for safe, problem free, and successful transfer of assets to the next generation.  Call our office today to schedule a time for us to review your estate plan and identify the best strategies for you and your family to ensure your legacy of love and financial security.  Our office is located in Santa Ana, CA but we serve all of California including Irvine, Orange, Tustin, Newport Beach, and Anaheim.

For more information and articles on estate planning, probate, trust law, and business planning, please visit our website and subscribe to our monthly e-newsletter.

Reference: The News-Enterprise (Sep. 8, 2020) “Distribution of estate can become a tricky matter”

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