Split things fairly – not exactly

Most every parent wants to treat their children fairly and equally. But, that may not always be exactly the same. You know the battles that you’ve fought over this. Susie is a few years older than Kyle and Jamie. Occasionally, maybe you let Susie stay up later or let her have a few other privileges (or responsibilities) because of her age. Instantly, you hear a chorus from the others, "but, that’s not fair!”

  These problems persist long beyond the time when it’s your responsibility to enforce their bedtimes. In many situations, it can be a problem even after you’ve died. The problems are especially difficult when there is one asset that is of greater value than the share of any one child would be. For example, let’s say you have four kids, a son and three daughters. You have a piece of land that’s been handed down to you from your grandfather. Today, the land is worth $200,000 and your total estate is worth $400,000. You have a few options:

  • You could divide the land and give a portion of the acreage to each child. But, some properties are not easily divisible and many times local law does not allow property to be divided without significant complications. Also, your children may not all be interested in the property.

   • You could give an undivided interest in the property to each child as tenants in common. Again, some of the children may not be interested. Also, this forces the children to work together even more than being neighbors.

  •  You can give all the land to one child. Perhaps your only son has always cherished the property. You could give all the property to him. But, this would result in an unequal distribution of $200,000 worth of property to your only son and the remaining $200,000 of nonland assets to be divided among your three daughters. Even though the other children didn’t want the land, they may still complain that the division was not fair.

  A solution could be to give your son the property, but find other ways to give to your daughters that would equalize the dispositions. For example, the property could be given to your son encumbered by a mortgage for $100,000, which he would pay over an extended period of time. Thus, the others would each receive 1/3 of $200,000 in the nonland assets and 1/3 of the $100,000 note. But, sometimes indebtedness between family members can cause friction among the siblings.

  A better solution might be to have life insurance that would add liquidity to the estate. A $400,000 life insurance policy would increase the estate to $800,000 and each child would receive $200,000 worth of assets and no indebtedness between your children.

  So, it seems the best solution is the life insurance, which may be fairly inexpensive, especially if you get a "second-to-die” policy that pays off after you and your spouse are gone.

  A qualified estate planning attorney, who focuses his or her practice in estate planning, can help you sort through various possible solutions to your situation. That attorney can help guide you to an answer that helps keep your family together and keeps sibling rivalry in their childhoods, where it belongs.

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Larry Deason is a Yuma attorney who is a member of the American Academy of Estate Planning Attorneys. He can be reached at 783-4466, or visit his Web site at www.deasonlaw.com.