Sibling relationships bring complexity, and each family is unique in its dynamics. The distribution of inherited assets among siblings becomes intricate, lacking a definitive right or wrong method.
Despite the absence of a universally correct approach to dividing property between siblings, it is crucial to recognize the importance of engaging in estate planning.
Estate planning involves organizing the management of your estate and determining the allocation of your assets after your demise.
For those with children, the decision of whether to pass on your property to them and, if so, the manner in which it should be distributed becomes a significant consideration.
If you’ve been pondering the intricacies of dividing property among siblings, this article is tailored for you.
In this article, we explore the strategies for effectively distributing inherited property among siblings.
Does Inherited Property Have to Split Evenly Between Siblings?
Your children’s inheritance depends on whether you die with or without a will.
A will grants you the power to specify how your property should be distributed, providing flexibility in dividing assets among siblings.
If you die without a will (intestate), state laws determine the property distribution, usually dividing it equally among close relatives.
To ensure clarity in your estate planning and decide how to divide inherited property among siblings, consult with a local estate planning attorney.
They can address your concerns and assist in drafting legal documents, such as a will.
What Should You Consider Before Dividing Inherited Property Between Siblings?
When dividing your property, the decision is entirely yours, given there are no legal restrictions.
Whether opting for an equal or unequal inheritance among your children, consider various factors.
It’s essential to note that the factors discussed are not exhaustive, and you may have additional considerations influencing your decision.
Parental care
As you age, you may find that your needs change.
As your needs change, one child or some children may end up providing more care for you than others.
This may be a factor that you consider when dividing inherited property.
Child needs
Each child possesses unique needs. When distributing inherited property, the presence of special needs or a disability in one child may influence your decision.
If other children can live independently, you might allocate a greater inheritance to the child with special needs.
Additionally, parents may take addiction into account when dividing inherited property.
If a child’s addiction affects their financial responsibility or an inheritance might exacerbate the situation, parents may opt for a reduced share or choose to establish a trust for them.
Financial acumen
Financial literacy varies among individuals. In the case of a financially irresponsible child, a parent might decide to bequeath them a reduced amount to prevent squandering.
Another option is leaving the child’s inheritance in a trust.
Grandchildren
Some people leave unequal inheritances to their children based on whether or not they have dependents.
This decision can be based on financial and/or emotional considerations.
Blended families
Families come in all shapes and sizes. Variations among family dynamics can influence how someone wants their property to be inherited.
Financial needs
Inheritance decisions often involve considering the financial needs of children.
If one child has greater income or more financial resources, parents may choose to allocate a smaller inheritance to that child.
The provided factors are not comprehensive but serve as a foundation for consideration when leaving an inheritance.
Your own list of factors may be shaped or expanded based on your personal beliefs.
How to Divide Inherited Property Between Children in Your Own Estate Plan
Making your own estate plan is an important part of end-of-life planning.
If you have children and you are going to include them in your estate plan then you are going to have to decide how to divide inherited property between them.
Cake is here to help you with that process. Below we provide the steps on how to divide inherited property between children in your own estate plan.
1. Think about how you want to divide inherited property
When dividing inherited property in your estate plan, first think about what you have and how you want to distribute it.
Equal division may seem straightforward, but it can lead to challenges, especially if significant assets like a house are involved.
Basic instructions might simplify the process but can create disagreements among children.
Another approach is specifying which child receives specific property, reducing the need for agreement but potentially stirring emotions and making it hard to ensure equal value.
2. Talk to your children
While estate planning doesn’t require discussing your plans, having conversations, especially about large gifts to children, can be beneficial.
Discussing potential financial consequences and understanding your children’s preferences can prevent conflicts among siblings later.
3. Talk to a professional
When you are estate planning, it can be helpful to talk to a professional like an estate planning attorney or a financial advisor.
These types of people can help you make the best decision to meet your needs.
They can advise you regarding your options, like deciding between a will or a trust or both.
An estate planning attorney can also help you execute the necessary legal documents.
4. Execute the necessary legal documents
After determining how you want to distribute inherited property in your estate plan, the next step is to finalize the required legal documents.
Typically, a will is a fundamental part of most estate plans, and additional documents like trusts can expedite property transfers, bypassing probate.
Comprehensive estate planning not only provides peace of mind but also ensures that your wishes are legally binding, even if your next of kin may not fully agree with them.
Properly executed legal documents mandate adherence to your specified wishes after your passing.
How to Divide Inherited Property Between Siblings After a Parent Dies
Coping with the loss of a parent is challenging, and alongside the emotional aspects, families must address the practical matter of dividing inherited property.
If you and your siblings are tasked with distributing inherited property after a parent’s death, you might be contemplating the next steps.
This discussion explores the process of dividing inherited property among siblings in the aftermath of a parent’s passing.
1. Talk before you act
In the event of inheriting property following a parent’s passing, it is crucial to engage in an open dialogue with your siblings to determine the course of action.
This step is pivotal in gaining a collective understanding of the preferences and intentions regarding the inherited property.
When unanimity is achieved among siblings, the subsequent process becomes significantly smoother.
However, should disagreements arise among siblings, it becomes necessary to explore ways to peacefully address the matter.
Depending on the severity of the discord, involving a neutral third party, such as a mediator, may prove beneficial in resolving conflicts amicably.
2. Talk to a professional
Even if you are in agreement, you may still find it helpful to talk to a finance professional or other professional like an appraiser or an attorney.
With large inheritances, especially those involving real estate, it can be beneficial to get professional advice before making any decisions.
Read more: Tips on how to handle inheritance issues with siblings
3. Get it in writing
Once you and your siblings have decided how you want to divide inherited property, you should put your agreement in writing.
This does two things. First, it ensures that everybody is on the same page.
Talking about what you want to do and putting that plan into writing helps to clarify who is going to get what and how that is going to occur.
Second, it can act as evidence if any of the siblings act contrary to the agreement.
4. Divide the inheritance
Once an agreement has been reached among you and your siblings regarding inherited property, the subsequent action involves implementing that agreement.
It’s important to note that this process may not occur promptly.
The probate procedure refers to the court-supervised method of managing an individual’s estate following their demise.
Throughout probate, various tasks, such as validating a will and settling debts with creditors, must be completed before the distribution of estate property can take place.
T Bag, J.D., LL.M. Professor of Law and Mediation Expert in Family and Siblings Property Disputes
Education:
- J.D., Conflict Resolution and Mediation, Harvard Law School
- LL.M., Estate Planning and Family Law, Yale Law School
Experience:
- Over 15 years of experience mediating complex family property disputes, including estate conflicts and business succession issues.
- Extensive background in facilitating negotiations between siblings and other family members to preserve relationships and family wealth.
- Recognized authority on the legal and psychological aspects of property disputes among family members.
Publications:
- “Mediating Family Property and Estate Conflicts: Keeping the Peace and Preserving Family Wealth” – A comprehensive guide on the advantages of mediation over litigation in family disputes.
- “Negotiating Principles of Entitlement in Sibling Property Disputes” – An analysis of entitlement principles applied in sibling conflicts over property.
Professional Affiliations:
- Member of the American Bar Association, Section of Dispute Resolution
- Fellow at the Center for the Study of Dispute Resolution, University of Missouri
Awards:
- Recipient of the Excellence in Mediation Award from the National Mediation Conference
- Honored with the Distinguished Mediator Award by the International Mediation Institute
Teaching:
- Professor of Law at the University of California, Berkeley, teaching courses on family law, estate planning, and conflict resolution.
- Guest lecturer at various law schools across the USA, sharing insights on mediating family property disputes.
Consulting:
- Provides expert consulting services to law firms and families on matters related to inheritance, property rights, and intergenerational wealth transfer.
- Advises on creating legal frameworks that minimize conflict and promote fair resolution in family property disputes.
Philosophy:
- Believes in the power of mediation to resolve conflicts while maintaining family harmony and protecting privacy.
- Advocates for creative and compassionate solutions that address the underlying emotional dynamics of family disputes.
Contact Information:
- Email: tbag@usamediationexpert.edu
- Office: Department of Law, University of California, Berkeley