Wills: divide equally between the kids, or to each according to their needs?

In My Humble Opinion (IMHO)
#1

A friend recently told me that he was reconsidering the division of his assets between his three adult children (he and his wife divorced many years ago). Although he knows that he can divide his wealth however he wants, he loves his children and wants to do right by them, particularly since there is a fairly substantial sum involved. He asked me for advice, but I haven’t had much experience with this sort of thing, and having known these kids ever since they were born, I feel that I’m not impartial enough. With my friend’s permission I’m posting the situation here with some unimportant details changed to see what everyone thinks.

Eldest child (W)
The eldest child has a steady job and a wife. He is a spendthrift and financially is more of a grasshopper than an ant (bought a McMansion he couldn’t really afford, a luxury sedan he couldn’t really afford, holidays every couple of years, you know the type). He and his wife are planning to start a family in a few years so his financial habits have improved.

My friend knows that W needs the money the most. He has often bailed W out financially and although there is some resentment that W is yet to stand on his own two feet, he has been impressed at W’s recent responsibility, and he wants his grandchildren to have a financially comfortable life.

Youngest Child (N)
The youngest child is the one my friend is the most worried about. It’s hard to explain without going into too much detail - he is well-meaning but self-absorbed and socially awkward. N is in his late twenties and shows no sign of leaving home.

My friend feels that due to N’s mental health issues, he doesn’t have the earning potential of B or W. My friend has said that he may be trying to compensate for the fact that he and N do not get along, but I also think that some of it may be “consolation” money since N will likely live out his life alone. He is also worried about what will happen to N when he is gone - N has never bothered to learn household chores, has problems interacting with people, and basically has no idea how to live in the real world.

Middle Child (B)
The middle child earns a very good salary and is close to owning his home outright. He is married, and he and his wife do not want children. He has always been the most easy-going of the three, and I suspect that he is my friend’s favourite.

Intellectually my friend knows that B needs the money the least. But as a good old-fashioned capitalist, he can’t help thinking it’s unfair to punish B for being the most successful. Unlike W, B has never been a financial burden, and unlike N, B has never been an emotional burden. But then again unlike W, B won’t have the expense of children to worry about, and unlike N, B has a a happy marriage and a good life.
Has anybody come across a situation like this? Would you divide your assets equally between W, B and N or would you reduce B’s share and divide it between W and N? Would you give more to someone based on whether they’ll have children? Any responses would be a great help to my friend, as the situation is causing him a great deal of anxiety.

#2

In this case I would give W and B the same amount of money. No way should B be punished for being responsible, and giving them a different amount could cause resentment between the brothers.

N I would give more but set it up as some sort of arrangement where he got a certain amount each month or year so he wouldn’t blow it all on crap. B and W will probably be understanding about this especially since they will end up supporting N if he never gets his act together.

We have a similar situation in our family. I have 2 sisters, one who is married and one who always lived with my mom. My mom died without a will and my married sister and I decided we would split any assets three ways except for the house which we would let my unmarried sister have. I am married too and my sister and I feel we have more financial advantages because we are married.

#3

I say unless one child has abandoned the family (no longer considers himself to be a member), divide it equally. Who cares who needs it more or less, you don’t reward those why spend more and punish those who are prudent. Nor do you do it the other way around. That is, unless you want your children to be angry and hate each other and you after you are gone.

I do agree that you can set up the money as a trust with a monthly allowance for anyone you want. It might not be a bad idea for both the less responsible ones.

#4

I would leave the money equally to the children. You can say all you want about Child X ‘understanding’ why you need to leave more money to Child Y, but on a really basic emotional level Child X is going to be feeling “He loved Y more than me.”

Which is especially unfair if Child X is the one who has saved and stinted and done everything ‘right’ while the others didn’t. “Even though I tried to be good, Daddy still loved the other more.”
As for the two elder maybe having to help support the youngest at some point if he isn’t given more money…well, if it happens, it happens. At least then it will be THEIR CHOICE to provide money to their brother instead of having him be seen as the favored one with the resentments that can brew.

#5

It would have to be equal with me. Their own unique personalities have put them in the situations they are in today. Money can change their situations temporarily, but they will still be the same people and eventually continue in the track of life they are most comfortable in. Giving one more than the others comes across as simply favoritism, and I would never want to bestow the aftermath of that sentiment on my children.

#6

I’m on the receiving end (or will be) of a “split equally” Will. I have two older brothers, both have been married and divorced [one has a child], both have their own businesses. I’m single, no kids and living with my parents as their full time Carer. My parents refuse to go to respite to allow me some “time off”, neither of my brothers will come mind them to give me time off… and at then end of the day all I get is a third share in a house - which isn’t going to be much use to a 50something…

By Irish law - if if my parents decided to be nice and give me the house,I’d inherit it tax fee as I’m their Carer. My brothers will have to pay tax on anything they inherit,and if if they wanted to be nice and give me their shares in the house, they’d have to pay a gift tax and I’d have to pay a tax of some sort as well. There’s some confusion over what would happen if my brothers decided to let me live in the house as sole occupant…

#7

I’m in a similar situation. My parents have decided to leave something to my brother and me because of how their parents treated them in their own wills. My parents have helped me out considerably financially during a rough patch and they’ve explained that I may get less than my brother in the will as a result. Which is fine with me because I’d rather have had the money when I needed it than wait for one or the other of them to die.

#8

I’m going to be on the receiving end of a “non-even” split, according to my parents. My younger brother is similar to the “youngest child” in the OP’s comment (socially awkward, lives at home, does not manage money well), and I have the career and already own a house.

My parents have told me that my younger brother will receive the house; it is unclear if I will receive anything in the will of value.

It’s OK by me … he needs the assistance more than I do (shrug).

#9

Divide the money equally.

Any sentimental assets that you want to go to a specific person, specify them in the will and (if you have time) hand them over beforehand. My aunt and one of my uncles had a huge fight over who got a statue that neither of them had liked… until Grandma died and all of a sudden they remembered that it’s XVI century :stuck_out_tongue: Aunt wanted me to give back great-grandpa’s traveling trunk, bought when he left for college: my answer was “Grandma gave it to me when I went to college and you’ll pry it from under my cold, dead body. Assuming it’s not you who ends up in the ER, I happen to be in better shape;” she backtracked and claimed she “didn’t realize I appreciated it.”

#10

So far as I can tell, my family’s wills are set up as equal shares (one way or another). Ferex, my grandma’s will (now that grandpa is gone) is set up to divide what land she owns sorta equally among the three kids (my pop and his 2 sibs). Of course, the details aren’t as straight forward, but the gist is that things should work out pretty close to equal among the 3.

AFAIK, my parents’ will (Og forbid I should find this out for real in the near future) is a simple equal-share split with my brothers and I.

For your friend: I would suggest doing something to help the youngest now. It’s possible that he could benefit from some sort of behavioral training. Perhaps your friend should have the youngest get evaluated by a psychologist for behavioral / personality disorders, and from there see a specialist, if appropriate (and, of course, if your friend hasn’t done this already). If there is an ongoing cost associated with this therapy, I would consider that to be a “special circumstance” to be accounted for in the will. (I.e. special circumstances paid out first, then a three-way split.)
Oh. And it doesn’t sound to me that W needs the money the most. He needs to be more careful with the money he’s got, not to have more handed to him. (What will he do when he runs out of the extra inheritance?)

#11

Your friend ought to talk to a lawyer experienced in estates and trusts, and should ask about incentive trusts. An incentive trust can be set up to pay out upon achievement of certain milestones. A typical way to set one up is to pay each beneficiary an amount equal to his salary. That encourages beneficiaries to go out and get jobs, because the more they earn, the more the trust pays. (Of course, it also permits a beneficiary to take a lower-paying job s/he loves, knowing that the trust will effectively double the salary.) In short, there are lots of creative ways to ensure that all beneficiaries will have equal access and opportunity to get the inheritance.

These questions are always a struggle, I think. My parents have given all their children a lot of money (primarily for education), but recently have helped out my youngest brother with a significant amount of money, and my dad particularly has been very worried that the rest of us will get upset that dad seems to favor my brother over the rest of us. Really, none of us care, but dad worries about that anyway. So I understand why your friend is concerned.

Some states have legal specialists – attorneys that have to take a special “extra bar exam” to become certified in a particular area of the law. You can usually find those attorneys listed on your state’s bar exam. Talking to an attorney who specializes in how to fairly allocate money to one’s very different children may give your friend some options and ideas he had not considered before. Good luck.

#12

I wonder if the recipient of one of these controlled trusts might be insulted by “being treated like a child.” (Some people could see it that way, and might be offended that their estate comes with strings while their siblings’ don’t.)

I see it thus: after you’re gone, the money’s theirs. What does it really matter if they blow it all at once or have to wait to squander each portion as it comes? You’re not going to teach an adult fiscal responsibility through a structured estate and you could possibly create resentment by trying to control the money beyond the grave.

#13

And this, people, is why wills are so important. :eek:
I think W and B should get the same amount. W certainly shouldn’t get more just because he can’t manage his money well. I would have to know more about the extent of N’s social problems before forming an opinion on whether he needs special extra provisions.

This sounds like it could either be mental illness or just excessive parental coddling. If it’s the latter, it should just be split evenly between the three.

#14

That is the argument against incentive trusts, and I do think it’s a problem to infantilize your adult children (although in this situation, I’d do an incentive trust for all three kids). To get around the psychological/emotional impact, you’d have to talk to the beneficiaries before your death, and let them know you plan to set it up that way and explain why you think it’s a good thing. (Helps, I suppose, if you can make the argument that the residual beneficiaries are the grandchildren, but it doesn’t sound like the OP is concerned about leaving money to the grands.)

But good eye, there. You nailed the downside in one.

#15

It sounds to me like N might have some special needs the others don’t have. A friend’s family was in a similar situation. The money was divided up equally and this family’s version of N, not being experienced with handling money was scammed out of a large part of it.

When word got out this guy who previously had no friends because he was a bit odd, now had large amount of money,he suddenly had quite a few “friends.” N couldn’t see that these people were only interested in having access to his money. He didn’t know better and trusted them. They convinced him to “invest” in some things. They handled the paperwork and in the end N lost just about all he had. When the money was gone, so were the friends. This left him deeply depressed, and he ended up drinking himself to death within a year. It was a horrible experience for his siblings, who tried to intervene to protect him, but they were too late, and now suffer from guilt in not seeing what was happening sooner and being able to save N. Although they did what they could, they feel they let their mother and father down.

If his mother could have seen what would happen to N, she would have put his money in a trust, to protect him from being the target of scammers. He probably would have resented it, it may have caused friction between the him and the other siblings, but he would also probably still be alive.

I don’t know the details of your friend’s N, but the above situation would be something to consider. The last thing I am sure your friend would want would be for this money to do more harm than good, and it N’s situation it might.

#16

I think it makes a difference how much money a “fairly substantial” sum is: you could have quite a lot of money that would still not be enough to sustain N indefinitely, even if he were given all of it: at best it would put off the inevitable for a few years. On the other hand, if it’s considerably more, (and I am not an estate planner, so I have no idea how much that would be), a chunk in a trust could actually sustain him for life if he isn’t capable of sustaining himself.

#17

I would suggest equal division between B and W for reasons already covered. It’s hard to say what to do about N. Without additional details, I can’t tell if N is just socially awkward or has some actual handicap that would prevent him from ever being able to support himself. If N will never be able to support himself due to factors beyond his control, setting up a trust for his care may be in order. If, however, he just won’t get his act together, that’s another matter.

I don’t know the family dynamics of your friend, but could he ask his children what they prefer? My parents did that with us. I’m single with no kids. Both of my brothers are married with children. My parents were in a quandry about what to do: divide it equally into thirds, give more to those with children, or give some to the grandkids themselves. I don’t know what they finally decided. I didn’t care what they did with the money, but I mentioned some items with sentimental value that I really do want. Whatever they decide, the fact that they asked means I won’t fell less loved regardless of their decision.

#18

Here’s another way to look at it, though: when your brothers are getting elderly and in need of care, they will have those children and their possible spouses and THEIR children to help them out – financially, with maintenance chores or housekeeping, or just to provide the car trip to the doctor’s office.

Singleton you? You’re going to being hiring maintenance men, home help, paying for taxis.
So likely you’ll need MORE funds at the end of life than they will, and so you should get left MORE.

(Half kidding, but living alone doesn’t cost one half of what it costs for a couple, and besides the couple will often have two incomes to draw on while you won’t.)

#19

Snipping all the stuff about Irish inheritance and taxes, since I know zippo.
What I do strongly suggest is that you start looking out for your own interests. If you are spending time being their full time Carer, that means you aren’t (I assume) working a paying job elsewhere, thus not building up seniority at a job, establishing a pension, getting enough income to invest to build a retirement fund, and so forth.

Turning yourself into a welfare case after your parents die should NOT not be your reward for helping your parents. At the very, very least, they should be paying you whatever it would cost to hire someone else in your place. Do some research, find out what the going rate is, and insist on being paid that.

It would probably be best if they paid you a regular salary, but it’s possible they don’t have enough cash flow to do that. In which case, you need to have some legal document drawn up that says that they owe you $xxxx per week for your care, starting as of Whatever date (and I’d push to have it start from whenever you started being their caregiver), and that that debt should be paid to you out of their estate BEFORE the remainder is split three ways.

This is still very fair to your brothers: the estate would have been reduced by that same amount if you hadn’t been willing to do the caregiving, so it’s just that that fee was paid to you instead of some outsider.
Anyway, I definitely urge you to see a lawyer about setting something like this up. Being a dutiful daughter is great, having that used to put you at a great disadvantage later in life is WRONG.

Good luck.

#20

Just chiming in to agree with the equal split, and N’s share in some kind of trust. Perhaps your friends would be wise to start facilitating some kind of independence training for N now, so as to put their minds at rest.