The boilerplate advice for creating an estate plan is equality. If you have multiple adult children, an estate divided unevenly can sow seeds of discord. It is not unusual for families to suffer divides after the death of a parent if one of the beneficiaries feels as though the estate plan was unfair.
However, there are cases in which equality is not in the family’s best interest. For instance, it is not unusual for parents to leave the house to all adult children in equal shares. In some scenarios, this may be a reasonable decision. However, it can cause a lot of strife in others. This is what happened in the case of the Mercers.
Ron and Julie Mercer and their house
Ron and Julie Mercer lived in a small bedroom community where they owned a bungalow. They had two children, Alice and Gwen. At the time that Ron died, Alice and Gwen were adults living separately from Ron and Julie. However, after Ron's death, Julie was having a hard time managing on her own. While Alice had a family and was living out-of-state, Gwen was still single and lived locally. Gwen decided to move back home in order to help her mother. As Gwen was functioning as Julie’s helper, Gwen paid no rent.
Eventually, doctors diagnosed Julie with a degenerative brain disease. Gwen acted as caretaker, but eventually Julie needed professional help at a memory care center. Once Julie moved, Gwen kept residing at the house. Sometime after, Julie died.
The Mercers had left the bungalow split 50-50 between Gwen and Alice in the estate plan. As with many Americans, the Mercer’s most valuable asset had been their home. However, what was ostensibly a decision made in the name of fairness quickly sprawled into a legal battle between the sisters.
A house (not) divided
The argument between Gwen and Alice was quite straightforward: Gwen wished to keep the property and live in it. Her viewpoint was that she was the one that moved back home to take care of Julie in her old age. She did not think buying Alice out of her share was justified.
Alice did not see it this way. Alice lived far away and had a family to tend to; thus, she could not return home to take care of Julie. Alice did not think that she deserved to lose her half of the property inheritance to Gwen. Since Gwen refused to buy her out, Alice wished to sell the property and split the proceeds.
The legal battle between Gwen and Alice was contentious and expensive. Alice ended up filing a partition action and eventually the courts forced the sale of the property. Both Gwen and Alice received an equal share of the proceeds, but neither of them spoke again.
Equality is not the only thing that you should aim for when creating an estate plan. Equity is also important. In many cases, it is wiser to leave the house to one heir and leave other assets of value to the others. You may also need to continually update your estate plan to reflect your current situation. For instance, if Julie believed that Gwen deserved the house in exchange for Gwen’s caretaking work, Julie should have updated her estate plan at that time.
Contact us at AmeriEstate to learn more about how to create an equitable estate plan for your beneficiaries and avoid arguments before they begin.