Equal is not always fair when it comes to your kids & your estate plan

During my initial consultation with clients, we talk about providing for their children upon death. Many clients want to divide their assets equally among their children. In theory, this tends to make a lot of sense. However, in reality, treating your children equally is not always fair.

Oftentimes, issues such as how much the parents contributed to the education of one child, or whether or not a child took on the role of caregiver, thereby sacrificing time and salary, tend to be overlooked. Parents tend to wear rose-colored glasses when it comes to envisioning that their children will be able to work out any issues that may develop. In the event that these sensitive issues rise to legal battles, they can be divisive and devastating and to your family. Because of this, ongoing communication and careful planning can alleviate many of problems before they arise.

One planning solution that can add liquidity and flexibility to an estate is life insurance. This added liquidity can provide parents with the ability to distribute assets both creatively and practically. A “second-to-die” policy that pays off after both you and your spouse die may be a fairly inexpensive and optimal solution. Even better, a properly designed Irrevocable Life Insurance Trust would eliminate the life insurance from being estate taxable.

By: Todd C. Ratner, Esq.