Should Inheritances be Equal or Fair?

WealthManagement.com
Mar 14, 2019

Stanley H. Teitelbaum, Martin M. Shenkman 

A common issue for those trying to plan an estate, especially the dispositive
provisions of a will or revocable trust, are the dispositive provisions. The issue is
summarized in a short phrase: “equal versus fair.” The vast majority of people use
equal as the default dispositive scheme and don’t delve into what’s “fair.” It’s
simpler. It’s assumed that equal won’t create ill will among heirs in contrast to an
unequal but fair distribution. While equal is certainly a simple default, it may not be
appropriate or fair for heirs of varying need. But exploring what might be fair once
the default approach of equality is varied can be a challenging and emotional
discussion for many clients.

Example: Parents have an estate of $3 million and three children. They bequeath to
a dynastic trust for each child a $1 million inheritance. That’s easy. The difficulties
arise when the parents have children with very disparate needs; health issues or
different wealth levels, for example. What if one child is a Wall Street tycoon and
another a struggling school teacher, recently divorced and struggling to make ends
meet? Should the same equal distribution be used? Perhaps in a different scenario,
one child has a chronic medical condition that will result in truncating her career at
age 45 and is struggling to face costly medical bills. Is equal really fair? A dramatic
difference in the financial circumstances of one sibling versus another sibling may
justify greater inheritance for

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