Do you know how to pick out the villain in a fairy tale? They either don’t care about their children or they play favorites. So why would a loving parent ever write an estate plan with unequal inheritances?

Sometimes Equality is Not Fair

If you haven’t yet seen this comic, it’s a great way to illustrate the point.

Your heirs likely have different needs. Providing each of them the exact same portion of your estate may seem like it’s fair, but it might not be. There are plenty of examples of situations where giving three different kids the same inheritance is not only unfair, but possibly harmful to their well being and future happiness.

For instance, let’s explore some case examples.

Family 1: The Smiths


Joe and Terri Smith were married in the mid-60s. Terri worked as a teacher in the public school for 35 years before retiring in 1999 and serves on the board of several local charities. Joe worked in finance, and with smart investments and some occasional risk taking, built a comfortable life for his family. They have an estate of 3 million, with a primary home, two retirement accounts, several investment accounts, and life insurance. They have three grown children: two sons and a daughter, all of whom graduated from college. Their daughter married a professional hockey player and currently lives in Lithuania with their two children. Their eldest son is a teacher and has three kids with his wife, who is also a teacher. Their youngest son just finished his residency in neural surgery and got married a few months ago. Joe and Terri have always supported education, and were happy to pay for all their kids’ degrees, including medical school. When they contacted their lawyer for an estate plan, they thought they would divide their estate equally in thirds. After discussing their options, however, they decided that providing their children with unequal inheritances would do more to honor their legacy and promote their values.


Having supported their youngest son through medical school, and knowing that his sustained earning potential exceeds the other kids’, Joe and Terri optioned to leave him a monetary gift of $400,000. Due to the high liability inherent in his profession, they are leaving him this money in trust to protect it from creditors. Their daughter does not have any financial needs right now, as she is living in a foreign country with a husband who earns a high paycheck. However, her husband’s salary will change when he gets too old to play professional hockey. Moreover, it’s likely that he will have significant medical expenses as he gets older due to the trauma his body is undergoing. Joe and Terri decided to leave a third of their estate to their daughter, also in trust. Should she get divorced, they want her inheritance protected for her and their grandchildren. Their son who works as a teacher is the child who needs the most financial support right now, and likely will continue to need support well into the future. Joe and Terri believe strongly that teaching is a noble profession, and would prefer that his salary reflected that. However, they are thankful that they have the ability to help their son. They are generous with annual gifts to him and his wife, and also place money in trust funds to pay for their grandkids college educations. Half of their estate is being set aside in trust for their eldest son, his wife, and their children. The trustee is directed to invest in assets that will generate income, with the intent that their son can draw on this annually to supplement his teacher’s salary. The remaining 1/6 of their estate will be divided among three local charities whose causes they support.

Family 2: The Johnsons


Bill and Catalina Johnson are in their late 60s and already have a will in place that leaves their estate in equal shares to their two daughters: Heather and Amanda. Bill owns his own business. Catalina, who is an accountant, manages the books and does tax preparation on the side. They meet with an attorney in late-April, when Catalina has had time to gather the list of their assets. Their primary concern is their eldest daughter. Heather was in an unfortunate skiing accident a few years ago. A ski instructor, she had been guiding a group when an out of control teenager came barreling down the slope and crashed into her. Her insurance covered her medical care, but since the accident she has intense pain whenever she sits or stands for prolonged periods. The insurance company filed a suit against the ski school, which they won, and Heather filed for disability so she could attend trade school to learn how to code. She works as a consultant out of her own home, providing her the flexibility she needs to take frequent breaks and stay active to manage her pain. She relies on Medicaid for health insurance and spends out of pocket for weekly chiropractor and massage appointments. Bill and Catalina don’t want the money they leave her to affect her disability benefits or eligibility for Medicaid. Bill mentions that Heather is probably addicted to pain meds, but Catalina quickly corrects him. She adds that watching everything that Heather has gone through has given her some anxiety about her health, and Bill’s. He has been experiencing some irregular heart issues for a while, and his doctor has been telling him to reduce his stress level and work less. But since their income is tied up in a family business, it hasn’t been easy.

Other Concerns

Their other daughter, Amanda, is married with two kids and expecting a third. She has a degree in business and her husband works in real estate. They have a very comfortable life, but are not saving much, and have made no provision for their kids’ educations. Bill and Catalina agree that they want to leave some money directly to their grandkids for them to use to pay for school. They also want to be sure that Heather doesn’t end up begging Amanda for money if her medical costs exceed her income. Catalina says that Amanda and Heather get along pretty well, but expects that Amanda would cut all contact with her sister if there was any financial tension between them.


After further discussion, it becomes clear that the best course of action is for the Johnsons to create a Living Trust and divide their estate into unequal inheritances. The Living Trust gives them with a place to hold all their assets, including the business, and provides a trustee to manage things in the event of incapacity. Heather will receive 1/2 of the estate. It will be held in trust and managed by a third-party professional. Directions to the trustee state specifically that the trust must be formed in a way that does not disqualify Heather for federal aid, and stress that the funds should be used for medical care outside what is covered by Medicaid, and to help with taxes and other living expenses. Bill is satisfied to know that if Heather’s addiction progresses, she will not be able to use trust money to buy drugs, and Catalina is relieved that there should be no need for Heather to ask Amanda for anything. Amanda will receive 1/4 of the estate, also in trust, but they decide her financial background makes her qualified to run the trust herself, so they allow her the option of naming herself as the sole trustee. Bill points out that if she does name herself sole trustee, she’ll probably spend the entire trust in a few years. The remaining 1/4 of their estate is to be split between the grandkids, in trust, to be used either for education, forming a business, or investing in one. They name Bill’s niece, an attorney living in Texas, as the trustee for the grandkids’ trusts. Bill also decides to take out an additional life insurance policy and hire a financial advisor to manage his investments, relieving him of some stresses and establishing a relationship with a professional that his trustee can rely on if it becomes necessary.

Takeaways to Consider

  • Treating children fairly does not have to mean everyone receives the same treatment.
  • Creatively dividing your estate may more accurately reflect your values and allow you to do even more good than an “equitable and outright” distribution.
  • Placing assets in trust can help protect them from irresponsible spending, divorce, predators, and creditors.

Each family is unique and each child is an individual. There is no substitute for talking with a knowledgeable professional about your situation. Let us help you consider all your options, and create an estate plan that reflects your children’s best interests, even if that means unequal inheritances.