How to Estate Plan When One Child Is More Successful
Some families are blessed with a child who is extremely successful in terms of wealth. This condition can make planning an estate more challenging than it would normally be. Making an estate plan as a parent with one child who is more successful than the other children can present some difficulties if you do not properly plan ahead.
Many families with multiple children have a child who is financially independent and may be worth several million dollars, while other children in the same family may not be as financially independent. While this is a good problem for most families, it can present some adverse consequences. The common view among parents with this situation is that the more financially successful child will receive less or no inheritance than the less successful children.
Many parents say their reason for doing this is that that the successful child does not need the inheritance and that the other children do need it. This can cause problems as the wealthier child receives less or no inheritance and feels that the parent did not love them as much, or thinks they are being punished for their success. The successful child may end up resenting parents who did not leave them an inheritance and other siblings who did receive the inheritance.
If a parent insists on leaving an uneven or no inheritance for a child with means, it is best to talk to that child ahead of time and explain the reasons for doing this. Explaining the reason for the course of action can preempt hurt feelings and resentment among the other siblings, and in most cases they will be fine with it. It is when this news comes as a surprise that problems occur.
Another solution is to leave even inheritances to children no matter what their financial situation is, and allow them to work it out amongst themselves. A more successful child can waive or disclaim their inheritance to be spread out amongst the other children. This allows the child to make the choice instead of being forced into the choice by the parents. Planning ahead can keep a family together.
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Randall A. Denha, J.D., LL.M. is principal and founder of the law firm of Denha & Associates, PLLC with offices in both Birmingham and West Bloomfield, Mich. He can be reached at (248) 265-4100 or by email at firstname.lastname@example.org.