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Inheritances – Is Equal Always Fair?

My friend has an aunt who is a widow with two adult sons with very different financial situations.  One son recently sold a business for a large sum and has in-laws that are very wealthy and own multiple homes.  The other son has a more traditional job and he and his wife provide financial support to her parents.  Despite her sons’ different circumstances, this widow feels very strongly that her assets should be divided equally if anything happens to her.  That is the best decision for their family. 

However, is splitting an estate equally between children always the right decision?  The answer is… it depends. 

According to a 2014 study[1], about 36% of American parents who were 50 and older with more than one child left an unequal inheritance to their children, compared to 27% in 1995.  The reason it is becoming a little more common to leave unequal inheritances is that people are considering additional factors:

  • Is the family a nuclear family or a blended family?
  • Is one child estranged from the family?
  • Who provided the primary caregiving needs for the parents?
  • Did a wealthier child proactively tell the parents to give more to their siblings?
  • Are there any children/grandchildren with special needs or disabilities?
  • Is there a need to balance out support given to one child over the parents’ lifetime?

Since inheritances can be viewed as a gauge of love, it could be perceived that receiving an unequal inheritance means a parent loved one child more than the other.  If a parent decides to leave unequal amounts to their children, it’s best to address it up-front and get everyone’s buy-in.  Otherwise, you may create a situation that potentially leads to bitter, long-lasting family feuds.  After all, wealthy kids have feelings too.

Do you feel that one of your children/grandchildren needs additional financial help?  You may feel more satisfaction by making some gifts now.  There are several ways to help, including outright gifts, paying tuition expenses directly to the institution, paying medical expenses directly to the provider, or establishing a trust with that child/grandchild as the beneficiary. 

No matter what approach you take, you most likely do not want to be remembered for causing hurt feelings.  Being transparent and deliberate in your thought process will hopefully lead to family unity now and down the road.  Since each family dynamic is unique, we invite you to contact your SWP team, and we can help you navigate your own situation and suggest outside counsel where appropriate.

 

[1] Unequal Bequests Revised August 2022 (Link)


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This article contains general information that is not suitable for everyone. The information contained herein should not be constructed as personalized investment advice. Reading or utilizing this information does not create an advisory relationship. An advisory relationship can be established only after the following two events have been completed (1) our thorough review with you of all the relevant facts pertaining to a potential engagement; and (2) the execution of a Client Advisory Agreement. There is no guarantee that the views and opinions expressed in this article will come to pass. Investing in the stock market involves gains and losses and may not be suitable for all investors. Information presented herein is subject to change without notice and should not be considered as a solicitation to buy or sell any security.

Strategic Wealth Partners (‘SWP’) is an SEC registered investment advisor with its principal place of business in the State of Illinois. The brochure is limited to the dissemination of general information pertaining to its investment advisory services, views on the market, and investment philosophy. Any subsequent, direct communication by SWP with a prospective client shall be conducted by a representative that is either registered or qualifies for an exemption or exclusion from registration in the state where the prospective client resides. For information pertaining to the registration status of SWP, please contact SWP or refer to the Investment Advisor Public Disclosure website (http://www.adviserinfo.sec.gov).

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