By Grace W. Weinstein

What the kids receive may affect family togetherness.

It's only natural to want to treat your children equally when your estate is divided among them. But suppose there is good reason for leaving more to one child than the others? What if the property in your estate is not easily divisible into equal shares? Unless handled with great care, what you pass on might seriously undermine the sense of family togetherness that you may have spent a lifetime building.

More to some?
If it's a question of providing more for a child with special needs or a disability, the other children will usually respond very positively, even though this may diminish what they will receive. Indeed, this indirect involvement in the care for a brother or sister often results in the family ties being strengthened.

But suppose there are several adult children, one of whom is quite well off. It might seem to make sense to reduce the share of this rich child, so other siblings get more. But even though the successful child doesn't need the money, he or she may often look upon it as a birthright, and resent receiving a reduced share. Some estate planners refer to this as "punishing success," and many say it's usually a mistake.

What is needed is honest dialogue that avoids surprises. Parents who find it difficult to talk about inheritance matters may find it helpful to create a videotape for the children that explains their decisions. It can be shown after they die, when the will is read; in no way, though, should the tape be considered a substitute for a will.

Caring for All the Kids
For moderate and larger estates, equal shares are often set up in a trust for the respective children; a child would benefit only from his or her respective trust. But if the parents' estate is limited, and there are minor children, it may be best to hold all of it in a single trust fund for all of the children, with the trustee given broad powers to use the income and principal according to the individual needs of each child.

In this way, the trustee can provide for your children much as you would yourselves. For example, when the youngest child attains age 22, and all of your children have finished college (assuming they want to go), the remaining assets can be divided into equal shares and paid to each child outright at that time or as they grow older.

A Single, Large Asset
If the estate is made up mostly of a single non-liquid asset, such as a family business, farm or ranch, equal division will be difficult, especially if only some of the children are active in running it. If left to all of them in equal shares, the groundwork will have been laid for family conflict. The long-term interests of the family and business are usually best served by allocating the business—or at least its control—to the child or children who are active in running it.

If there aren't enough other assets to take care of the children who aren't interested in the business, the problem can be solved by purchasing life insurance to benefit those children (often owned by an irrevocable trust, so the proceeds aren't subject to estate taxes). If the division won't take place until after the death of both parents, as is often the case —a joint life policy that pays off upon the death of the second parent may be an effective and economical solution.