Sibling rivalry and life choices can raise some awkward issues in inheritance planning
Let's suppose you have three adult children. One is single and lives at home. One has a wealthy partner and gave up work to look after their two children. And the third has a lucrative career and one child.
The question to consider when making a Will or lifetime gifts is whether to allocate equal shares to all three or give more to the child(ren) with greatest need for money. The question has long-running potential for resentment and rivalry because even if your eventual decision seems fair to you, it may not seem fair to all your children.
Dilemmas and sub-dilemmas
While the overarching decision is between equal or unequal shares, there are other specific questions within this:
- Your home: If one child still lives at home, what happens to the property when you die? If it's left to all your children, you may fear the others will insist on selling it, leaving that child with nowhere to live. But is it fair to leave the home just to the resident child?
- Vulnerable children: How do you provide for a child who may never be able to live independently, while still being fair to others?
- Grandchildren: If your son has three children and your daughter just one, should each grandchild get an equal amount, or is it unfair for your son's family to receive three times as much as your daughter's?
- Favourite items: How do you decide who gets a valuable or cherished piece of jewellery or art that all your children love? And can that be balanced out by other gifts?
Solutions and strategies
With all these questions, and others too, there are solutions and strategies available to you, both legal and human.
The legal strategies are varied, including the use of trusts to provide for a vulnerable child after your death, or to ensure that one child can continue to live in the family home.
The human strategies involve talking to people. To a lawyer because we advise on these situations regularly and can discuss family dynamics and options for achieving fairness. And to your family, so you can discuss your thinking and their own responses and feelings.
What you really want to avoid is creating unwelcome shocks when you're no longer around to discuss things.
It's not great for their memories of you, nor for future family relationships.
BEWARE legal rights
Another issue to take account of in relation to inheritance tax planning in Scotland is legal rights. These give children and spouses (and sometimes grandchildren) an entitlement to a certain share of your estate, even if you specify otherwise in your Will.
In other words, even if one of your children has no need for money, they may still choose to claim a share of your 'moveable' property such as cash, investments, or business assets. We can advise you on how to manage this.
