From late fall through New Year’s, for many, this is a time to be with and care about family. It can also be a time when emotions run high, especially at the holiday dinner table. It can also be explosive when one of the discussion topics is estate planning for the parents.
Helping Parents Navigate Estate Planning
At Henry V. Kaelber, CPA, CFP®, CGMA, we are committed to providing our clients and readers with every advantage when trying to preserve and grow their human, intellectual and financial wealth. This article focuses on how parents can ease sibling resentment when one child gets more cash. This invariably comes into play when considering your estate planning, but more commonly occurs in everyday life.
Henry V. Kaelber, CPA, CFP®, CGMA is a CPA firm in Charlottesville, Virginia, providing quality accounting & tax services for individuals, business, trusts & estates. We also offer business consulting services and private equity structuring support.
Parents Can Ease Sibling Resentment When One Child Gets More Cash
The “mooch”. Seems like there’s one in every family.
When one child is more financially needy, resentment can alienate brothers and sisters long after their parents pass away. Some grow angry about the financial burden the sibling is placing on the parents, while others fume that they aren’t getting their fair share.
As for the parents, while their beloved dependents may exasperate them, they’re often reluctant to say “no” when there is a clear, albeit unrelenting, need. Especially when the child isn’t asking selfishly but is truly struggling or, worse, has disabilities that leave parents no choice but to give the child all they can.
Whatever the situation, there are ways — both financial and practical — for parents to try to lessen their more independent children’s resentment and prevent sibling disgust.
Don’t Pretend It Doesn’t Matter
If you’re wondering whether some of your kids are bothered by your playing “financial” favorites, consider the conversation and body language that occurred with the entire family around the dinner table this past holiday season. Seemingly harmless jokes, questions or remarks and, yes, even the telling eye-roll are signs that preferential treatment has been duly noted. In less subtle households, the adult children might have come right out and vented their outrage.
Part of the issue for kids is the difference between “need” and “deserve.” What you define as “need” may look to your family like undeserved pampering. Sure, your youngest needs a car to get her back and forth to her new job, but why buy her that hot new sports car when a sensible used sedan would do? Even if you have your reasons, it’s important to consider how your other children might perceive your actions.
What’s Fair and Equal Estate Planning For The Parents?
Parents struggle with two words: fair and equal. But none of us as parents are equal with our children. Anyone who thinks they are is fooling himself or herself.
A parent, for example, can equally love a daughter who’s a doctor and a son who’s a fledgling musician, but the kids’ financial needs throughout their lives are likely to be far different. Providing financial support for either should be dealt with as the parent deems just.
What’s “fair” also may depend on the parents’ financial circumstances over time. The oldest, raised during the lean years, may have to help pay their own college bills. While the youngest might get tuition, room and board covered in full during the parents’ peak earning years. Also, “fair” can prove impossible when you’re dealing with children with mental or physical disabilities who demand lifelong financial support from their parents.
A Fair and Measured Response
For some parents, the way to address these sibling concerns is with a simple response: “Life isn’t fair, get over it.”
If you want to do your best to be fair, however, realize that strict scorekeeping can backfire. Mainly, because it is so difficult to do. For example, how do you quantify, or prove to your other children you’re keeping fair score? You probably can’t, and the last thing you want is to give them leave to check up on your accounting.
There is an exception, though, and that’s for big, one-time gifts. If you’ve given a child a one-time financial fix — say a down payment on a first home — there are ways to make it up to other kids, even if you can’t afford the same lump sum for each. One way to do it is to treat the gift as an advance on the inheritance.
The Issue of Need Versus Deserve
When thinking about your estate, you’ll have to wrestle with the issue of need versus deserve. Even after a lifetime of handouts, a financially needy child might still benefit far more than a wealthier sibling from an equal split of your assets. Does that wealthy doctor deserve complete financial equality with the starving musician? Absolutely. But she probably doesn’t need it.
If you’ve built up a substantial estate, it may make sense for you to square things away during your lifetime. You and your spouse can gift up to $11,000 per child or grandchild each year, without incurring gift tax. Gifting to a grandchild might be a particularly good idea when one child is much more financially secure than others. For that child, the best use of parental cash might be for the grandkids’ tax-deferred college-savings plan.
Parents of children with mental or physical handicaps may not have additional financial resources left to bequeath to other children. Though while most family members usually understand, there’s still a way to let them feel equally loved. Talk to your children about what sentimental assets in lieu of cash they’d like to have.
Then Comes ‘The Talk’ About The Estate Planning For The Parents
Once you’ve come to a financial decision that you and your spouse can both live with, clue your kids in. But only to an extent. Your wishes may change over the years. So being specific now may lead to anger once you’re gone and Junior doesn’t get the windfall he had anticipated.
What you need to say, and this applies to all estate planning, is: “I’ve prepared estate planning documents, and here’s where they’re located in the event of my death. I have given thoughtful consideration for what I’ve done for each of you financially over my lifetime, and do not assume that I’ll be treating you equally at death”. What you shouldn’t say is “I’ve given your brother 90% of the estate and left you 10%”.
Finally, once you’ve said your peace, calmly move onto another subject. Often, my mom would say, “the least said, the best mended”. Also, putting your feelings in writing may be a better idea for some parents. Doing so allows the ability to edit and revise words, and creates an opportunity to eliminate the heat and emotion.