Should You Distribute Your Estate Equally Among Children In Unequal Circumstances?

Jul 14, 2017
Client Newsletters Estate Planning Living Trusts News Purpose of a Living Trust Trust Administration Trust Benefits Trust Management & Settlement Trust Process

Sample Case Study:

  1. Client in their mid 80’s with an estate of approximately $9,000,000.
  2. Children are three daughters in their early 60’s.
  3. Two of the three daughters have received substantial help (+/- $500,000 from the parents over the past 30 years).
  4. The third daughter has received little or no help as she has been financially successful and responsible.
  5. The two daughters that received substantial financial support have less than $20,000 net worth.
  6. The financially responsible daughter has a net worth of about $1,000,000.

Estate Distribution Options:

  1. Give each girl $3,000,000.
  2. Deduct the funds already given to the less responsible girls from their portion of the $3,000,000 and give the balance to the responsible daughter.
  3. Put the two girls’ funds in a CRT over their lifetime.
  4. Give the needy girls 40% each and the one that does not need it 20%.

Additional Estate Distribution Options and Considerations:

  1. Give to each daughter according to their needs.
  2. Did the better-off child get that way through sacrifice while the others squandered? If so, split it equally.
  3. Don’t assume the better-off child won’t have some financial setback or costly event in their life, so as to make you think they “don’t really need any inheritance from you.”
  4. Consider an equal split but for the better-off child leave a portion of their share directly to their children. The reverse may also work if the less well-off daughters squandered their money or were irresponsible, and then maybe part of their share should go to their kids.
  5. Determine your own split and leave the two girls with some cash and with their balance create some sort of annuity out of the inheritance to provide a lifetime supplement, especially if any of the kids are not responsible with money.
  6. It is not uncommon to reduce the share of a child to whom you have given substantial financial support during their lifetime.
  7. Choose not to play favorites just because of the station in life your children have attained.
  8. Split it in thirds, reduce the amount given over grantor(s) lifetime and give that to charity.

Also, consider some of the dangers listed below of passing on wealth to your children.

Dangers, Considerations and Recommendations of Passing Wealth to Children:

By passing on wealth to your children, they:

  • May lose desire to work and, therefore, their self-esteem.
  • May always question their ability to achieve wealth on their own.
  • May never get the credit they deserve (i.e., “they started with a lot”).


  1. Give assets early (especially if passing on a large amount).
  • Allows you to give in small amounts to allow children to make their mistakes.
  • Allows you to be there to help them.
  • Gives them the freedom to fail and learn.
  1. Treat children individually (and differently, if necessary).
  • Allows consideration of children’s differing financial circumstances and philosophies.
  • Allows application for children with special needs.
  • Allows application for training of younger children.
  • Communicates respect for the individuality of each child.

There are many other possibilities, but this article gives some common solutions to distributing your Estate to your children.