19 Jul How to Divide Your Estate Fairly

Many people dread the thought of estate planning because they don’t know how to split up their assets equally. But not having an estate plan at all can lead to serious disputes between your loved ones. Although dividing an estate isn’t a one-size-fits-all task, there are many basic steps you can take to help make the process easier. Here are our professional tips on how to divide your estate as fairly as possible among your loved ones. 

Five Steps to Divide an Estate Fairly Between Beneficiaries 

1: Communicate Openly

Like so many other aspects of life, communication is key in estate planning. Before you make any decisions about dividing your assets, it’s crucial to be open and honest with your loved ones about your intentions. What they think is fair may not necessarily align with your intentions. 

This is a great opportunity for you to explain your decisions and for your beneficiaries to voice their concerns. Having a family discussion can help you make the fairest choices, help your beneficiaries manage their expectations, and reduce the risk of disputes after you’re gone. 

2: Know that Fair Doesn’t Have to Mean Equal

Fairness doesn’t always mean dividing your assets equally. A fair distribution involves considering your relationship with each beneficiary, as well as their contributions to your estate. For example, if you own a family business, you should evaluate how much each of your children contributes to running it. Then you can divide their shares accordingly. 

You can also make specific bequests for sentimental assets. For instance, if one of your grandchildren is particularly fond of and appreciates your vintage jewelry and the rest show no interest, you could make a note in your will that you wish to leave specific pieces to that grandchild.  

3: Consider the Needs and Circumstances of Your Beneficiaries

Whether you’re dividing your estate among your siblings, children, grandchildren, stepchildren, or other loved ones, every beneficiary is different. So in addition to considering their relationships with you, it’s also important to consider the unique financial circumstances, needs, and goals of each individual. 

Consider their age, financial stability, health, educational needs, whether they have children, etc. Taking these factors into account will help you tailor your estate plan to each individual, helping to make the distribution as fair as possible. 

For instance, maybe one of your beneficiaries is disabled and has special needs, or has a health condition with ongoing medical expenses. You may wish to leave a larger share to them than to your other beneficiaries who are in good health and less financially burdened. 

4: Create a Revocable Living Trust

Living trusts provide plenty of benefits all on their own, but they also make it easier to divide your estate fairly. 

For example, if you leave a large inheritance to a loved one with special needs, it could disqualify them from receiving their government benefits. But placing the inheritance in a special needs trust allows you to leave them as much as you like without affecting their eligibility. 

A trust is also useful in protecting any beneficiaries who are financially irresponsible. When you set up a trust, you get to dictate how the funds are distributed after you’re gone. To prevent reckless spending, you can choose to have the funds distributed in a series of gradual payments instead of a lump sum. 

5: Review and Update Your Estate Plan Regularly

No matter how you decide to split up your estate, the best way to ensure that it’s divided fairly is to keep your estate plan up to date. Your relationships with your beneficiaries can change over time, and so can their life circumstances. 

If, for example, you marry someone with children but you don’t update your estate plan, your stepchildren would be left without an inheritance. Or if you leave funds intended to pay for college for your youngest grandchild when you first set up the plan, but now they have graduated, you will need to make an update.  

You should always update your estate plan after any major life events such as marriage or divorce, and the birth or death of a family member. Otherwise, you should review and update your plan with your advisor every three to five years. 

Arizona Estate Planning Attorney

The best way to divide an estate fairly is to consult a professional estate planner. At Phelps LaClair, we’ve been helping Arizona residents successfully divide their assets and leave inheritances for their loved ones for over 40 years. 

We can help you choose the best estate planning documents to ensure your estate is divided fairly between your beneficiaries. Give us a call at 480-892-2488 today to schedule your free consultation. 

Images used under creative commons license – commercial use (7/19/2023). Photo by Jessica Rockowitz on Unsplash