In today’s society there is no such thing as simple, especially when it comes to families. Complicated family structures are becoming more prevalent, with a decline in the so-called “traditional family.” According to Pew Research, only 46% of children are living with two married parents in their first marriage, compared with 73% in 1960; one in six children are living in blended families (Parenting in America, Dec. 2015). With these newer unique family structures, come questions and complexities in the form of inheritance: what is the proper distribution of wealth to pass along to family members — to whom and exactly how much should be given to each? With so many factors to take into consideration, these decisions are never easy, especially when considering that what is “equal” is not necessarily “fair” and vice versa.
When facing the decision of inheritance assignment, the majority of concerns stem from relationships. Consider, what are your wealth goals for future generations? These decisions are impacted most by your relationships with your children. What if you have a stronger relationship with one child or constantly clash with another? Sometimes this is further compounded by the complex structure within your children’s own family. What if there is conflict with your child’s spouse, or do you have situations which are complicated by stepchildren? You may find yourself asking these questions.
Further consideration must be made in terms of your children’s financial wellbeing. The likelihood of your children making exactly the same amount as each other is very slim. Chances are, one is probably better-off than the other. You want to take care of the child who needs it most, but at the same time that is not necessarily fair to the other children who have worked harder perhaps to achieve bigger financial successes. Then again, maybe all children are well-off. This calls into question, how much do your children need? Family sizes have been shrinking over the past few decades. Smaller families equate more fortune to divide out to each child. From a more philosophical viewpoint, does wealth buy happiness? Maybe you want your inheritance, or at least a part of it, to go to a charitable organization. How important is that cause to you? Should the organization receive the same amount as each child or more?
A whole other issue to be addressed comes in the form of a family business. What if only one child works for the family business or is interested in continuing the legacy? Is it fair that both children receive the same amount when only one is going to invest their time and energy into the business?
Decisions are challenging. Decisions related to your family are even more challenging. And decisions related to how much money you should pass on to each member of your family becomes even more challenging still. The reality is that what is “fair” is not always “equal” in terms of inheritance.
To better answer these questions, you might need some impartial advice — financial therapy with a trusted advisor who can help you find the solution that works best. Your D.A. Davidson Financial Advisor can provide additional guidance and perspective on inheritance and walk you through the steps to take when determining your distribution of wealth. Talk with your D.A. Davidson Financial Advisor today, or find one here, and start the conversation on how to best continue your legacy.