It's the usual dilemma: "We've provided significant lifetime financial support to one child for a business venture, while another has pursued a lower-paying but socially valuable career. How do we address this disparity 'fairly' in our estate plan without penalising success or creating new resentments?"

The question centres around an anxiety of having to treat the children equally. However, the decision also comes with an emotional weight of unspoken assumptions and the children's varying needs. 

The most common advice given is the following: "The estate plan is a fresh start; treat all children equally in the will to maintain harmony. Keep gifts already given as a separate matter."

This advice offered by well-meaning advisors has a practical appeal. It suggests a clean slate and a seemingly straightforward path to avoiding disputes by treating all beneficiaries identically in the final distribution. The rationale is understandable: equality is a powerful symbol of impartiality and can, on the surface, seem the simplest way to maintain peace. Studies suggest that equal distribution is often judged fair when plans are transparent and communicated clearly, which often they're not. The idea of separating lifetime gifts from the estate plan attempts to compartmentalise past financial decisions, perhaps hoping that bygones will be bygones once the will is read.

However, families have a shared history, differing needs, and the emotional undercurrents that complicate, or at least make things more interesting. While the aforementioned advisor's approach offers a degree of financial scaffolding, the heart of the challenge often lies in the unaddressed nuances of "fairness" itself and the potential for this seemingly simple solution to inadvertently create new, or exacerbate old, resentments.

What is Fairness Anyway?

It's valuable to explore the complexities that a strictly equal, "fresh start" approach may not fully resolve. The concept of "fairness" when passing on wealth is not as simple as it may first seem; it's a deeply subjective and context-dependent process. What one child perceives as fair, another, with a different life story and financial reality, might see as profoundly unjust.

"Fairness" is not always synonymous with "Equality". While equality–distributing resources equally–is a dominant (societal) expectation, particularly among siblings, its strict application can overlook crucial factors. Neglecting differing needs or significant past contributions under the banner of simple equality can, paradoxically, fuel feelings of unfairness. Such needs and contributions do not necessarily need to be of a financial nature either.

Do Principles of Distributive Justice Help Us?

When struggling with "fairness", we are intuitively navigating several principles of distributive justice. Understanding these can illuminate pathways to more nuanced solutions:

  • The Principle of Need: This principle suggests allocating resources based on individual necessities. In the scenario presented, the child in a lower-paying, socially valuable career may have greater future financial needs than the child whose business venture received substantial lifetime support. A need-based approach in the estate plan could address this disparity, potentially enhancing perceived fairness for the child with greater needs, especially if economic disparities are significant.
  • The Principle of Equity/Merit: This principle allocates resources based on contributions, effort, or perceived deservingness. The lifetime support for the business venture could be viewed through this lens – an investment in that child's entrepreneurial efforts. While more common in business contexts, it can apply in families where contributions to a family enterprise or significant caregiving have occurred. However, in this specific scenario, applying it too heavily in the estate plan without balancing other factors could be seen as "penalising" the other child's different, non-financial contributions that are valuable in their own right.
  • The Limitations of "Separate" Lifetime Gifts: The notion that lifetime gifts are entirely "separate" can be problematic. Significant inter vivos transfers, like the business support, are rarely forgotten and can substantially impact intra-familial wealth inequality. While parents often justify unequal lifetime gifts based on children's needs or specific goals (similar to a business venture support), these past actions invariably shape the context (and the final sum available) for the final estate distribution. The child who received substantial business support might view it as seed capital or an early distribution, while the other child might perceive a lingering imbalance. Transfers made for specific goals can be viewed instrumentally, in purely financial terms by the recipient, making a simple "fresh start" in the will feel inadequate to the child who didn't receive similar support.

The Crucial Role of Procedural Justice: The "How" Matters as Much as the "What"

Even the most thoughtfully calibrated distribution can falter if the process by which it was decided is perceived as unfair. This is where procedural justice comes into play. Regardless of whether the final distribution is equal or intentionally unequal to address past disparities, the perception of fairness is significantly enhanced by:

  • Open Communication and Transparency: Lack of communication or miscommunication is a major source of conflict. Explaining the rationale behind estate planning decisions, including how past lifetime support is being considered (or not), and clarifying expectations for the final distribution can dramatically improve acceptance, even of unequal outcomes. Having these conversations, however difficult, allows grantors to articulate their intentions, love, and reasoning directly.
  • Voice and Engagement: While the ultimate decision rests with the grantors, involving adult children in discussions about their needs, their understanding of the family's financial history, and their perspectives on fairness can make the process feel more inclusive and respectful. This doesn't mean decision by committee, but rather ensuring children feel heard and understood.
  • Clarity of Intentions: Documenting not just the distribution plan in a will, but also the reasons behind it—perhaps in a separate letter of wishes or by clearly explaining decisions to heirs—can provide crucial context and emotional understanding. This narrative can bridge the gap between the legalistic language of a will and the emotional realities of the family.

Let's Try a Holistic and Empathetic Approach

Addressing the grantor's concern requires moving beyond a simplistic "equality means harmony" platitude. It involves a deeper dive into what "fairness" means for this specific family, in this specific context.

  1. Acknowledge and Validate All Paths: The child who pursued a socially valuable but lower-paying career made a choice with inherent worth, just as the entrepreneurial child did. The estate plan can acknowledge the value of both paths, not by penalising success, but by recognising differing resulting circumstances. What are the value systems of a family? Is it "just" revolving around the bank statement, or does it go further? 
  2. Reframe Lifetime Support: The significant support for the business venture need not be a point of contention if it's openly discussed. Was it an advance on inheritance? An investment with an expectation of return to the family estate, or to the child directly? Or a gift intended to equalise opportunity at that specific time? Clarifying this, first in the grantors' minds and then with the children, is crucial. Ideally, any support given is framed correctly before it is given. A reframing of past contributions is very tricky to get right – if it needs to be done, do it with lots of generosity on your part.
  3. Consider "Compensatory" or "Balancing" Provisions: If the lifetime business support is viewed as a significant financial benefit already received by one child, the estate plan could aim to "balance" this for the other child. This doesn't necessarily mean a precise mathematical equalisation, which might be impractical, undesirable or just open to too many re-interpretations in the future. Instead, it could involve a larger share of the remaining estate, or specific assets, being directed to the child who received less lifetime financial support, framed as recognising their different financial circumstances and needs.
  4. Focus on Future Well-being and Relational Equality: Beyond the bank statement, consider what each child needs to thrive and to feel respected and valued within the family system. The goal is not just to divide assets, but to support each child's capacity to "walk tall" and maintain dignified relationships with their siblings post-inheritance. This also means that the family needs to have a clear understanding of what it wants to achieve together in terms of a vision and how it is going to do this in line with their values.
  5. Embrace Flexibility and Customisation: No two families are alike. The most effective estate plans are tailored to the unique needs, values, and dynamics of the specific family. This might mean that strict equality in the will is not the fairest approach if it fails to account for significantly different starting points or needs created by past actions and current realities.
  6. The Power of a Shared Narrative: Family meetings, facilitated by advisors who understand family systems and wealth dynamics, can be invaluable. These forums allow for the articulation of the grantors' values, intentions, and the "why" behind their decisions. They also provide a space for children to understand the broader picture, ask questions, and feel part of a transparent process. This might also be the starting point for the children to adopt and adapt this process within their own families.

The Journey Towards Enduring Legacy

The question of how to "fairly" address disparities in lifetime support within an estate plan is a journey, not a destination with a simple map. The initial advice to "treat all children equally in the will" can be a starting point, but it often falls short of addressing the deep emotional and financial factors at play.

A more comprehensive approach, as we advocate at The Cecily Group, involves a thoughtful exploration of what fairness truly means within the unique context of the family. It requires understanding different principles of justice – equality, need, and equity – and recognising that these may need to be carefully balanced. Crucially, it hinges on transparent communication and a fair process, ensuring that all family members understand the reasoning behind the decisions made.

To help navigate these dynamics, we developed the Family Council Canvas, a tool that facilitates discussions about family values, goals, and a shared path forward. This approach enables advisors to guide families and have the real conversations that need to take place. If you are interested in taking part in our study, you can find further information here.

By moving beyond platitudes and engaging in these deeper considerations, grantors can craft estate plans that not only distribute assets but also nurture family harmony, validate the diverse paths of their children, and build an enduring legacy of thoughtfulness and care. This often requires guidance from advisors who specialise in these complex family wealth dynamics, helping to open the black box of fairness and look for solutions that help the family to live in harmony (sometimes despite the wealth).