Is Equal Fair with Estate Planning?
Most of our clients want to treat their children fairly and equally. Splitting assets equally among the children may be easy, but is it fair? When dividing assets, it is often important to determine the needs of the kids as well as what you have previously provided. This is where it can become difficult.
Some gifts can be considered advancements against an inheritance, but most people do not take the right steps to have them considered an advancement. A trust can be designed to deal with previously gifts or outstanding loans. After all isn’t an outstanding loan really a debt that is now owed in part to the other siblings.
If you own a family business, the decisions can be even more difficult. What if some kids work with the business and others do not. Do you want the business sold, or to continue to provide for those who have chosen to help out? Were they fairly compensated for helping, or have they sacrificed over the years to support the family business.
How will those left in charge treat salary, bonuses, and income to themselves and will this be fair to their siblings? Will the child manager’s spouse convince your child to give more to their family than the other siblings?
As you can see, there could be serious problems caused by your death.
Life insurance can help equalize these issues by buying out the other siblings interest in the business so that these conflicts do not have an opportunity to destroy your family. The business can be owned and run by a trust with rules that are put in place do decide compensation, profit, and income related issues.
The trust or business can have a buy-sell agreement in place. A buy-sell agreement is a contract or obligation that specifies the rights and responsibilities and procedures imposed on owners of a family business. They can put into place now, and the future owners will have to abide by them after you are gone.
If you’re trying to divide your assets fairly and equally, it is important to plan ahead even if the kids do not think it is fair. A Jacksonville estate planning lawyer can help you plan and hopefully avoid the common mistakes a traditional estate plan can create. We have seen these mistakes and the impact on families over years of costly litigation.