Over the last few weeks, a certain brother expressed frustration that the brother’s sibling received larger and more frequent gifts from parents of the brother and sibling. That brother also identified how much less love the brother perceived receiving compared to the sibling.
These events happen every day in millions of families around the world. It just so happens that it was somehow, apparently newsworthy last week because the brother is a British prince.
Fair and equal are not the same, but ultimately, neither matters in gift-giving and estate planning.
The idea that equal and fair are not interchangeable is based upon the fact that everything in the world is unique. Parents may give a family business worth $1 Million to one child and $200,000 cash to another child.
These gifts immediately appear unequal and possibly unfair to the receiver of the cash until it is uncovered that the business cannot be sold for ten years. Thus, the business gift is not really a gift of an asset or money but is instead the gift of opportunity. If the opportunity traditionally has only returned $20,000 a year, the cash gift can appear to be much more valuable to some people in some circumstances.
A similar situation arises when parents without businesses plan their estates for distribution after death (estate plans). One child may receive $70,000 cash while another child receives a $70,000 IRA for which tax will be due and which can be redeemed/cashed-in over five years. Depending upon tax rates and how the investment market is performing when the parents die, one or the other of these gifts may ultimately be worth much more money than the other.
Parents and other people who plan their estate plans sometimes rely upon a formula/system. Sometimes, estate plans are based upon equality. Other times, estate plans are based upon fairness, giving more to some and less to others based upon perceptions of need or anticipated use. Still other times, the estate plan is based upon equality or fairness considering gifts given while the parent or other distributor was alive (inter vivos gifts). And other people plan their estates simply based upon who the givers think will appreciate or use the gifts the most, the way that some people give Christmas and birthday gifts.
Ultimately, the size or character of a gift or inheritance is not a reflection of the magnitude of love or affection of the gift-giver.
As adults, we would certainly encourage a grandchild who received one video game when comparing himself to another grandchild who received two video games to not be jealous. We would similarly encourage a daughter who received a practical gift to not be envious of her sibling who received something more popular about which to brag at school.
The disproportionality of gifts, including inheritances, does not ultimately matter. Beyond a safe home and food to eat, anything else is something for which thanks is incredibly appropriate but for which expectations are counterproductive and setups for disappointment.
Lee R. Schroeder is an Ohio licensed attorney at Schroeder Law LLC in Putnam County. He limits his practice to business, real estate, estate planning and agriculture issues in northwest Ohio. He can be reached at [email protected] or at 419-659-2058. This article is not intended to serve as legal advice, and specific advice should be sought from the licensed attorney of your choice based upon the specific facts and circumstances that you face.
