There is no easy way to divide up money between family members because no matter what you do, someone is going to feel like they were treated unfairly. And that person’s complaints are going to make everyone else in the family as miserable as he or she is.
Slate’s advice columnist, “Dear Prudence,” recently answered a question from a person struggling to figure out if he or she had done the right thing by dividing a seven-figure inheritance equally between all four of his or her children.
The parent has four children, all of whom are married, but none of whom are particularly well-off financially. Child A has no children, Child B has five, Child C has three, and Child D has two. The parent initially planned to divide the inheritance up into four equal shares, but Child B suggested the parent divide it up into five shares and distribute the fifth share equally between all of the grandchildren. Child A strongly objected, citing the disparities in the number of children each sibling has, as well as a laundry list of past times he or she felt slighted. The parent ultimately decided to stick with the original plan of dividing up the inheritance four ways, but he or she wanted some reassurance from Prudence.
Prudie pointed out “there’s no inheritance so large and no parent so generous that a bunch of siblings won’t find a way to [fight about it].” And she’s right. There’s nothing wrong with dividing up an inheritance between the children, and nothing wrong with giving a share to the grandchildren. Or skipping gifts to the children and giving only to the grandchildren. Or not giving anyone anything. But that doesn’t mean that your loved ones will be happy with any of these decisions. Sadly, there is no estate planning magic wand.
One of the best ways to head off a dispute over an inheritance is to do what the letter-writer did and hand out the assets while you are still around, if you are financially able to do so. First and foremost, this will give you the pleasure watching your loved ones enjoy the gift you have given them. Many of our clients tell us how happy they are that they began passing on cherished objects and assets sooner rather than later because it has given them the opportunity to connect with their loved ones in meaningful ways.
A second reason to dole out inheritances before your death is the fact that it allows you to mediate disputes by explaining your reasons for giving a certain amount or a certain family heirloom to a certain person. There is no substitute for a first-hand account of why a particular gift was made. Plus, you never know how someone is going to act while he or she is grieving. Why not take that painful emotion out of what can be a stressful situation?