Insight

Does your Estate Plan Address your Grandchildren Fairly?

Does your Estate Plan Address your Grandchildren Fairly? | Estate Planning CPAs in Alexandria | Weyrich, Cronin & Sorra

Many people, when planning their estate, simply divide their assets equally among their children. But “equal” may not necessarily mean “fair.” It all depends on your family’s circumstances. Specifically, providing for grandchildren is one area where equal treatment may inadvertently result in unfairness.

Consider this Scenario

Bob has two adult children, Ted and Carol. Ted has two children and Carol has four. Suppose Bob’s estate plan calls for his $8 million estate to be divided equally between his two children.

When he dies, Ted and Carol each receive $4 million. But after they die, Ted’s two children receive $2 million each from their grandparent’s inheritance, while Carol’s four children receive only $1 million each. (This assumes, of course, that Ted and Carol each preserve the full amount of their inheritances.)

Possible Solutions

To help ensure that Bob’s grandchildren are treated equally, he can purchase a life insurance policy, with the proceeds divided equally among his grandchildren. Alternatively, he can arrange policies on the lives of Ted and Carol designed to provide equal amounts to each grandchild. One advantage of this approach is that, because Ted and Carol are younger, the available death benefits would be greater. Bob could use gifts or loans to help Ted and Carol pay the premiums.

Life insurance allows Bob to provide more for his grandchildren, on an equal basis, while still dividing his other assets equally between his children. Depending on how Ted and Carol spend their inheritances, Ted’s children may still receive more than Carol’s on a per capita basis, but the additional assets provided by life insurance will likely make Bob’s estate plan appear “more fair” in the eyes of his grandchildren.

If you have concerns about how to properly address certain family members in your estate plan, please do not hesitate to call our offices for additional information and to speak to your representative about how this could affect your situation.

 

© 2021

 

Related Insights

When should you turn down an inheritance? | estate planning cpa in washington dc | Weyrich, Cronin & Sorra

Estate & Wealth Transfer Planning

When should you turn down an inheritance?

“Thanks, but no thanks.” If you expect to receive an inheritance from a family member, you might want to use a qualified disclaimer to refuse…
Your estate plan: Don’t forget about income tax planning | estate planning cpa in harford county md | Weyrich, Cronin & Sorra

Estate & Wealth Transfer Planning

Your estate plan: Don’t forget about income tax planning

As a result of the current estate tax exemption amount ($12.06 million in 2022), many people no longer need to be concerned with federal estate…
Are you and your spouse considering “splitting” gifts? | estate planning cpa in elkton md | Weyrich Cronin & Sorra

Estate & Wealth Transfer Planning

Are you and your spouse considering “splitting” gifts?

Gift splitting can be a valuable estate planning tool, allowing you and your spouse to maximize the amount of wealth you can transfer tax-free.…

Connect with us

Use the form below to send us an email. WCS responds directly to all inquiries and general questions within 24 hours of posting.

This contact form is deactivated because you refused to accept Google reCaptcha service which is necessary to validate any messages sent by the form.