Even after working to take the necessary steps to build an estate plan, many Texans might still sow the seeds of family discord if the proper estate planning strategies are not used.

Often, there is an issue with the division of assets and it has nothing to do with their equal distribution, but their fair distribution. People who are leaving assets, real property, family-owned business, and more to their children will strive to be fair, however when it comes down to making the hard decision as to which child or heir should receive what, additional practical considerations come into the equation aside from the concern of fairness.

For example, if a person has assets that come to a certain amount of value and there are four children, the easy answer is to divide the assets between the children. This may not be an ideal solution. There could be items in the portfolio, like a family-owned farm, that one of the children has no desire to be involved with the operation of the farm and this issue needs to be evaluated when considering estate planning. Perhaps other assets can be traded among the children so everyone will be satisfied and there will not be discord. Similarly, a family business might have some family members heavily involved with the daily operations and other family members not involved in an active role.

For situations like a family farm or business, one strategy that may be beneficial is to have some liquidity in the estate. Life insurance can add to the estate’s value and increase the chance that a fair distribution will be probable. There can be a buy-sell agreement in which there are specific rights among those who own the family business. This can dictate control and how the shares are sold after the person’s death. It will stay in the family as desired and the children who did not want to be part of the business will not feel as if they missed out on their fair share.

For people who are creating estate planning documents, equal and fair can mean two distinctly different things. Often, people worry about the potential for resentment between family members after a death in the family. Many strategies can be utilized to help create a cohesive estate plan that will accomplish the fair and equitable distribution of the estate property. An experienced estate planning attorney can help those interested in creating a customized estate plan make the right decisions that help insure that their estate is handled in accordance to their wishes.

 

The above blog is for informational purposes and is not intended to be legal advice.

 

Source: Forbes, “Why Your Estate Plan May Divide Assets Equally, But Not Fairly,” Mark Enghrari, April 30, 2017