Almost as soon as a younger sibling arrives, so does rivalry for parent attention. As the children grow up, it is amazing to see how early these rivalries turn into “hitting” and “no, thank yous.” As children grow up together these behaviors change, but sibling rivalry rarely ever goes away.
What can happen when you neglect to have a conversation about sibling rivalry during the estate planning process? It can lead to unintended fights that can taint relationships. But there are three general tips for avoiding these situations when considering your legacy.
Set up trusts carefully
If adult siblings have very different financial circumstances, you may want to provide help when a financial emergency arises. Be very cautious with trust set up. Funneling assets into one trust with guidance that children can ask a trustee for money as needed might lead to issues. It could create hard feelings if one sibling is always tapping the fund for expenses the others may not view as “needed.”
When there are concerns that an adult child may squander an inheritance or use it to fuel an addiction, a trust is an effective tool. Take some time to consider trustee determinations, however. Does a more responsible sibling have a different view of what might be “necessary” expenses? Asking another sibling to step in as a trustee could be a recipe for conflict.
Decide who will make decisions about the vacation home
If your family vacations together at a ski in/ski out condo every winter or spends summer extended weekends at a cabin in the mountains, you probably have many happy memories and may want to pass the property to children. Here are a few questions to consider:
- How will upkeep costs be paid?
- Who will be in charge of paying these costs?
- When will children be able to use the property?
A conversation may even uncover that selling the property and splitting the money between siblings is a preferable route.
Explain differences between gifts
You may have one child who you have helped more during your lifetime (for example, giving money for a down payment on a home). If you want to make sure each child receives equal gifts, this child may receive a smaller inheritance.
Make sure to be clear to explain the differences between sibling gifts though. And do not play favorites in planning gifts.