“Preventing Inheritance Conflicts”

Question:  How can I prevent inheritance conflicts between my children?

Answer: Few things in life are as emotionally charged as the issue of inheritance. It has been well said that “if you really want to know a person’s true character, share an inheritance with them.” It is a fact of life that many families have been ripped apart by perceptions of unfairness in inheritances.

Recall Jesus’ parable of the prodigal son in Luke chapter 15. The prodigal had demanded an advance on his inheritance, which he promptly wasted  on riotous living. When he returned to his father, broken and shamed, the father was so overjoyed at his younger son’s return that he ordered a celebration. What was the reaction of the dutiful, hard working older son who had faithfully stayed by his father’s side? Anger at how the younger prodigal had been favored. Inheritance conflicts are as old as civilization. Your children may be perfect, but you really don’t know them until they divide your money.

In hundreds of estate planning conferences, I have heard the overwhelming majority of parents insist that their adult children will get along, no matter how the estate is divided. However, my experience as an estate planner has shown time and again that this is simply not true.  In order to help minimize inheritance conflicts between your children, here is a rule of thumb: “If you don’t want the blame---treat your children the same.” Inheritance conflicts can destroy otherwise good family relationships and those conflicts can last for generations, affecting not only your children but grandchildren, cousins,  and in-laws.

Let’s look at two examples: (1.)  Mr. and Mrs. Smith  have two children. Their daughter is a respected physician who was a dutiful, hard working child and who went to college and medical school on full academic scholarships. Their son never finished college, and has bounced from job to job, taken bankruptcy, and has constant trouble making his child support payments. Because the Smiths see the son as having greater needs, they decide to leave the majority of their estate to him. What does this say to their daughter? That she is being punished for her success!  (2.) In our second example, Mr. Jones has three children. He was ill for many years and his two daughters took care of him while his son took care of his farm. In  his will he left the farm, which comprised 80% of his estate, to his son. Can you imagine how his daughters felt?

However parents decide to divide an estate, the children  will take this as their final grade  as to how the parent felt about them.  A will is not the place to play favorites; that it is a recipe for resentment. Wills also tend to awaken ancient sibling rivalries; children, even adult children are extremely sensitive to perceptions of unfairness. A “performance-based” inheritance plan—favoring or punishing one child – is a surefire recipe for relationship breakdown among the heirs. 

Most children expect to inherit something from their parents. However, most families never openly and honestly discuss how the inheritance will affect all concerned. If the parents are not open, then grown children may fall prey to old feelings of   favoritism, resentment, deprivation, or being cheated or lied to. On the other hand, parents may resent feeling pressured to give up their financial privacy. Elderly parents may worry that revealing too much information may affect how their children will treat them.

The best way to help prevent inheritance conflicts between your children is through open and honest communication. Family meetings,  clear written explanations, and planning for dividing family heirlooms can go a long way in creating understanding and acceptance. Consult an experienced estate planner and ask him or her to facilitate an inheritance discussion with your children. To help avoid future potential inheritance conflicts, make your heirs part of the solution so that one or more of them will not become part of the problem.

Yes, it is your money, and you may do with it as you wish. But at what cost to your family?  You will be remembered by your heirs. Will your life be an inspiration to others, or will it represent chaos and destruction?  The lives of your heirs can be enhanced by your thoughtful and inspired inheritance planning. Or they can be destroyed.