National Siblings Day

National Siblings Day

April 10, 2021

Sibling rivalry is a tale as old as time. Even the closest siblings have spats. And as parents, we are taught that we are supposed to love all of our children the same. We’re not supposed to pick favorites. So, why would a parent divide their assets to their children unequally? In many families, equal distribution is the obvious choice, but in some families, it might not make as much sense.

Whenever you’re dealing with your money, you get to pick your beneficiaries. A beneficiary is the person or people who will inherit all, or some, of your assets in the event of your passing. More simply put, they get your stuff when you die. You can list more than one person, and you don’t have to choose a relative. You are the benefactor, and you can choose exactly how, how much, and when someone will receive their inheritance. The more specific you can be about the distribution, the smoother the process for your surviving loved ones. So, you may be wondering how to split the distribution among your children?

It makes sense to make an equal split if your children have similar needs and life situations. If your children have always received similar support from you in the past, continuing to keep everything equal seems to be a logical decision. Sometimes leaving an equal inheritance can alleviate emotional and financial conflict among your children.

Unfortunately, sometimes an even distribution among your children may actually create conflict amongst the offspring. One such example is for business owners. Oftentimes one of the children becomes employed by or a partial owner of, the family business, while their siblings pursue their own passions/careers. An equal split in this situation could force the employee/owner child to have to buy out their siblings, should they want to sell their pro rata shares. If you didn’t leave behind any additional liquid assets, it may be difficult for them to come up with the capital. The child employee/owner may be forced to sell the family business, if sufficient resources cannot be obtained. If one of the children should inherit the business, you can equalize through life insurance, or being conscious of which child inherits which asset. For example, in South Dakota, a farmer with three children may have one child who has dedicated his/her life to the farm. To try and avoid conflict, the parents leave the farm equally to all 3 children. Both other siblings need the cash and have no tie to farm so they decide they would like to sell. Suddenly there is a conflict, as a direct result of the actions taken to try and avoid such a scenario.

Another example of a time when equal distribution may not feel right, is if one of the children was acting as the caregiver. You may find that you want to reward them for their love and dedication, or to replace lost wages. There may be many times where it may not make sense to split things equally. A few more examples include a special needs child who cannot care for themselves, if you’ve already given considerably to one child, a blended family where one child will continue to receive support from another parent. Finally, you may decide one child is financially irresponsible, struggling with an addiction, or otherwise incapable of being trusted with a large inheritance.

Ultimately however you decide to split your assets is completely up to you. Planning your estate doesn’t have to be tricky or overwhelming. At Agile Wealth Solutions we have solutions for all stages of your life and planning. Call today to schedule a complimentary consultation to see how we can help you! (605)731-9121.

 

This is meant for educational purposes only.  It should not be considered investment advice, nor does it constitute a recommendation to take a particular course of action. Please consult with a financial professional regarding your personal situation prior to making any financial related decisions.  (04/21)