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Client Gifts and Intra-Family Conflict

All too often, we see clients who are having difficulty in planning during retirement because of conflicts – real or perceived – among their adult children. These clients want to be in a position to pass some of their estate on to those children and often to grandchildren as well. However, some clients are reluctant or unable to part with assets during their lives and unsure of how best to transmit those assets to family members upon the client’s eventual demise.

Though it is seemingly simple and fair – and very common in usage – a plan leaving an equal share to each child is not always a satisfactory approach. Unless the actual distributions take into account any significant lifetime gifts to various of the children, those not so favored with such gifts will, perhaps rightfully, feel shortchanged and resentful. Similarly, even if the value of assets provided to two or more children is equally divided, all assets may not be considered equal for other reasons, such as sentimental attachment, and again there may be resentment.

If the amounts are equalized, there should be no problem among rational persons, you might say, but it is important to understand that reason does not enter into family conflict in many cases. One person desires a particular asset because of sentimental reasons while another desires that same asset simply to deprive the first of the pleasure of enjoying it. Or one person may feel that another should not receive so much because that other is wealthier in their own right, whether through hard work or good fortune, and so may not have as much need for an inheritance or gift. Whatever the situation, problems among the recipients often arise when it comes to gifts and inheritances in the family circle.

One of the most powerful approaches to these issues is a simple one – communication. Well, maybe not that simple, but a clear statement of what one intends to do for their children and grandchildren and why helps to reduce problems later. No, you probably do not owe that explanation to them since your money is yours to dispose of as you wish (with a nod to the tax man, of course). However, for your own peace of mind and potentially that of your family, getting your plan out in the open prevents speculation and unfounded jealousy.

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