Should a Will Even the Score?
Consider this difficult situation: An elderly woman lends her oldest son $20,000 to help pay for some expensive medical care for his teenage son – her grandson – who’s stricken with cancer.
When the woman writes her will, a different son who is also her executor – and happens to be an accountant – advises her to deduct the $20,000 loan, never repaid, from the oldest son’s modest inheritance.
This happened in my family, and I was of two minds at the time. Technically, the money was a loan – not a gift – so not paying it back was unfair to the other siblings who didn’t receive $20,000. But it seemed uncompassionate to take the money out of a bequest, given the graveness of the teenager’s illness.
Financial planner Rick Kahler discusses a similar situation in this video and proposes something that may seem radical: evenly dividing up your estate isn’t necessarily fair.
The way Kahler explains his argument in the video, it makes sense – at least in the particular instance he’s discussing. But does it depend on the situation?
In a popular previous blog post, “Estate Planning 101,” a lawyer cuts through the legal fog and clarifies the essentials of getting one’s affairs in order.
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If there's money owed, I understand it should probably come off the top. In this situation, it never should have been called a loan. The circumstances make it a gift, in my opinion. My sister is in for 100% of my mom's estate when she passes, and I'm not just fine with that, it was my recommendation. It's not going to make up for two bad marriages, and the inability to work, but it will go a long way toward me not worrying that she'll ever risk being homeless. I'm sorry there wont be even more for her.
I think there is a problem with children who feel entitled to receive their parent's estate when they pass. IMHO that money is my parent's to give to whomever or whatever they want. If they chose to pass on some of that to me, I would consider that a gift, not an entitlement. Money should never come between family members; it is simply not that important.
Joe, I wish I felt your generosity toward my sibling, who also is a victim of her poor choices. I hope your family feels the same way. This is why Rick's advice is so worthwhile. "Equal" treatment for siblings who do not contribute to parental care and were inordinately coddled financially during the parents' lifetime can generate bad will that probably is just a continuation of favor shown during parents lives. It has caused many siblings I know to end their relationships on the death of the parents. Probably not what the parents intended.