Deciding how to divide assets when estate planning can be a stressful decision to make, and it’s helpful to enlist the help of an experienced attorney to help you navigate this process. Parents often want to leave their heirs equal amounts of money or assets, but there are some situations in which this might not be the best option. However, in most cases, estates are divided equally by branches of the family or by heads of the family in a per stirpes or per capita division. You can also combine both of these and divide things per capita by generation. Your goal is to pass along your estate in a way that will make each heir feel seen and supported, without causing conflict within your family. So speaking with an estate attorney can help you ensure that you are making the decisions that will cause the least upset. They can also help you navigate other aspects of estate planning so that you can feel rest assured that you have things set in place the way you want for the future.
Deciding How to Divide Assets When Estate Planning: Divide Your Wealth, Not Your Family
To Divide Equally or Not
Most people want to divide assets when estate planning into equal shares for their children and heirs. However, there are some special circumstances where this might not be advisable. For example, if one child has significant ongoing medical needs or special needs, parents might want to establish a trust that can ensure they receive the funds for ongoing treatment. Another example would be if some children have roles in a family business while others do not. Dividing assets based on children’s financial success isn’t usually advisable because it can end up making those that earn more feel penalized.
Per Stirpes
One way to divide assets when estate planning it to use a per stirpes approach. This means that your estate will be divided equally among each branch of the family (per stirpes is Latin for “per branch”) when you pass away. In this situation, if an heir, or child, should pass away before their parents, the estate would pass in equal shares to their heirs, who are the grandchildren, instead.
Per Capita
Another way to divide assets when estate planning is to split things up per capita. This means “divided by heads.” In this approach, each heir is given an equal share. In this situation, if a child died before their parent, their heirs or children (the grandchildren of the deceased) would receive the same amount of inheritance as their aunts and uncles. In some situations, this can create conflict because heirs might not feel that it’s fair that their nieces and nephews inherit the same amount.
Per Capita By Generation
To avoid the conflict of a per capita approach, some opt to combine the two approaches in a per capita by generation scenario. In this approach, the direct heirs (second generation, or children of the deceased) would receive what was promised to them. Their heirs (the third generation or grandchildren of the deceased) would then receive an equal share of the portion that would have gone to the entire third generation, no matter their connection to the direct heirs (second generation).
Figuring out how to fairly divide assets when estate planning can be a source of stress for many families. If you are hesitant about the decisions you are making, it can be helpful to have an open and honest conversation with your children about your intentions. There are some situations in which it makes more sense for one child to inherit more than another, but it’s often helpful to explain this. For example, if one child requires financial help for special needs or if they have a piece of a family business. In most other situations, families choose to equally divide their estate via a per stirpes or per capita arrangement, or by combining them in a per capita by generation system. Figuring out estate planning can be very overwhelming, so an experienced family attorney can help you navigate this intricate