| Read Time: 2 minutes | Estate Planning

Forbes recent article, “Two Key Steps to Successful Estate Planning” explains that, in many instances, the ultimate goal in estate planning is to ensure the wealth you accumulated, lasts for a while and is used to improve the lives of your family.

Unfortunately, the process of passing on the wealth often creates problems within the family. Disagreements can arise, and conflicts about how to manage and spend the wealth, further strain relationships. A parent can help avoid these problems, but it takes some effort, in addition to the traditional estate planning actions.

Asset ProtectionFirst, consider how you want the estate divided. Estate planners say that the three ways of dividing an estate are fairly, equally, or equitably. Many parents feel obligated to divide the estate equally. However, a better answer for many estates, especially those with above average value, is to use all three ways to divide the estate. A father may decide he’ll provide for each of his children through graduate school or as far as each chooses to go with their schooling. That’s known as the “fair” allocation of wealth. Although it is likely that different amounts will be spent on each child, each one is given the same opportunity and is able to maximize his or her own talents and interests.

One portion of the estate is for equitable giving to people a parent believes helped them or earned it in some other way. Some make equitable distributions from their estates to employees. A child who helped build the business more than the others, helped care for an ailing parent, or made some other extra contribution might receive an equitable distribution.

The rest of the estate is split equally among the children, with each getting approximately equal value from the estate.

This blended distribution approach can make sense, because each type of request has a different purpose. The fairness gifts motivate the children and give them opportunities. The equitable gifts reward people, and the equal gifts are to increase financial security for children and perhaps future generations.

For the estate plan to work, the children and any other heirs need to be told of the plan early. They need to be prepared to handle the assets. That involves regular communication and education. Most people don’t involve their children in financial matters early enough. Parents should be speaking with their children about money from an early age. However, it’s never too late to start.

ReferenceForbes (May 15, 2018) “Two Key Steps to Successful Estate Planning”

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Kyle Robbins

Kyle Robbins is the founder and sole owner of The Law
Offices of Kyle Robbins. He received his J.D. with honors from the University of Texas School of Law and his B.S. in Food Chemistry and Microbiology from Oklahoma State University.

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