Children Are Separate and Unequal
When children have unequal skills or different needs, estate planning can be flexible. The best planning may include a testamentary trust, designed to manage estate assets after the grantor’s death. While the solution is simple to suggest, the person engaged in estate planning will have to cope with several difficult choices
As a result, Mrs. M directs her attorney to draft a new will. She plans to set aside greater funds for her daughter than her other children. That will states that upon Mrs. M’s death, 70% of her estate will be held in a trust for her daughter. The remaining 30% will be divided into three equal shares for each of Mrs. M’s sons.
The primary purpose of the trust is to manage funds for daughter Deidre’s health, maintenance, and support. Mrs. M wants the trustee to be fully supportive of Diedre whose health has affected her financial situation. Whether or not any funds are left at her daughter’s death is of secondary concern.
Nonetheless, Mrs. M hopes that there will be a remaining portion of the trust upon Deidre’s death. In Mrs. M’s mind, those deferred transfers to her sons should ease any distress over the unequal initial distribution.
Mrs. M knows that at Deidre’s death, one or more of her brothers might also be deceased. Any predeceased child’s share could be divided equally among their children, Mrs. M’s grandchildren. Therefore the plan for the termination of the trust for Diedre will require a division into four shares, each share representing one of the children, whether or not they survived Mrs. M. The remainder of the trust, upon Deidre’s death, will be divided equally, with shares going outright to surviving children and other shares further divided among the grandchildren.
Mrs. M’s sons are dismayed to learn of the new will. The first son says that the brothers will take care of their sister and there is no need for a trust. Mrs. M. has her doubts. Her sons are married and Mrs. M worries that the daughters-in-law will have other plans. What guarantees are there that her sons or their wives will be generous with Diedre if there is no trust? The second son complains that an unequal division is not intrinsically fair. The second son argues that he should not inherit less because his sister is ill. Mrs. M understands but is more concerned about her daughter’s support. The third son says, “mom, do whatever you want, it’s your money.” The third son returns home to Hawaii.
The unequal distribution of an estate challenges our sense of fairness, our regard for our heirs, and our desire to benefit future generations. Crafting the language of a trust tests our creative skills as well. Perhaps the most difficult and most important decision is the selection of a trustee to manage the trust and make appropriate distributions. Trustee selection is the next installment.
Evan J. Krame
