For most of us, considering the distribution of the property we have accumulated over our lives is a painful reminder of our mortality. That difficulty is magnified when we feel the need to leave unequal distributions of property between loved ones.
There are several common reasons why someone would leave unequal bequests. The relationship may simply be strained or the recipient could even be completely estranged from you. On the other hand, one individual may already have received a significant amount of property from you during your lifetime and an unequal distribution is an attempt to even out the amount given between loved ones. In cases of increased need of the beneficiary, you may feel the inheritance left to one beneficiary will be support, while other bequests simply will be gifts.
Whatever the reason, unequal distributions have an increased risk of someone disputing the validity of the document. For that reason, you should tread carefully when leaving different amounts of property between beneficiaries who would expect equal distributions.
If you are modifying existing documents in a way that will decrease percentages given, do not use a codicil or simple amendment. This will accompany the original document, alerting beneficiaries to the fact they originally were to receive more. Even without filing a contested action in court, this can cause severe divisions between beneficiaries and major problems for the executor.
Instead, revoke your last will and testament and create a completely new document. If a trust is the primary planning tool, you may need to have a restatement of the trust drafted with the new terms.
If you are creating new documents, be specific as to personal property bequests and the distribution of the residuary estate. If you want to bypass a child, but have no intention of cutting off future generations, be clear you are not disinheriting the descendants of that individual.
In most cases, discussing your intentions and reasons with beneficiaries during your lifetime can avoid significant pain and court involvement later. For those who are unable to discuss with family, leave a letter of explanation. Keep in mind this letter should not be one last jab at the individual, but should be an attempt at reconciliation and a recognition that they may be surprised or unhappy with your decisions. Leave the sealed letter with your last will and testament.
Lifetime advances are more complicated. Many times, individuals create a will, naming beneficiaries and percentages, with the intent to reflect loans that have been made to one beneficiary. This can be incredibly complicated if the beneficiary is in repayment. Unless the last will and testament is updated upon receipt of each payment toward the loan, it likely is that the borrower beneficiary will receive more or less than the share that was intended.
A better plan is to leave each beneficiary the amount you ultimately want them to receive but include a provision for repayment of any loans out of their share. Keep a separate promissory note with careful records of payments made so you do not have to continuously update your bequests as the loan amount changes.
Similarly, if you are leaving a smaller amount to a beneficiary because of a gift during your lifetime, include language to that effect in the document.
Remember, your residuary estate may be vastly different than what you have during your lifetime, so a decreased gift usually should be noted within the document as a dollar amount rather than a decrease in percentage.
Each estate plan is unique, just as the needs of each family are unique. Be clear on your intentions and prepare your estate plan while considering the potential problems.