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Rethinking Bequests And Equal Giving
Do families always want to divide their gifts to children equally? By Matthew Erskine
PARENTS FACE A PERENNIAL QUESTION IN ESTATE planning: whether they should equally divide the assets they’ re going to pass on to their children. Traditionally, equal division has been the norm, since parents want to be fair and keep the family unified. However, as family dynamics evolve and financial realities shift, people are reconsidering the notion of equal distribution, and financial advisors are playing a pivotal role in guiding families through these complex decisions, ensuring that estate plans reflect fairness but also the unique circumstances of each heir.
The Norm Of Equality
The tradition of dividing estates equally among children is deeply rooted in societal norms. It conveys parents’ clear message of love and impartiality, while also downplaying the risk that some children will feel resentment or that someone who feels spurned will turn to litigation. However, research indicates that many parents choose to divide inheritances into different amounts because they might have a deeper understanding of their children’ s circumstances. Some lifetime gifts will need to be adjusted to address a child’ s specific needs or compensate for previous support provided to one child over another.
Grandchildren generally receive either a reduced or nominal amount too, or, if their own parents have died before the grandparent, some of what the parents would have received. Parents will naturally make their direct descendants a priority, but things become complicated when there are stepchildren or in-laws involved.
Financial advisors must help clients navigate these complexities, ensuring that estate plans align with both legal frameworks and family expectations.
Systems Dynamics
Systems dynamics is a method researchers use to approach complex systems where the outcomes aren’ t linear. That makes it a helpful model for advisors looking at estate planning topics.( Author Daniel H. Kim talks about the subject in his book Introduction to Systems Thinking.)
For example, to predict the long-term implications of equal versus unequal bequests, advisors can look to such models to identify recurring patterns in family governance, things that can influence the outcome of inheritance decisions. They’ ll want to keep the following things in mind( items Kim discusses in his book):
1. Shifting the burden. Parents often provide financial support to their less successful children during their lifetimes. But then when those parents die,
JUNE 2025 | FINANCIAL ADVISOR MAGAZINE | 53