You love all of your kids equally...but what does "equal" mean when it's time to divide your estate between them? If you own a business or have other assets that are hard to divide (like stocks), life insurance can help solve the problem.
Life Insurance Helps Split Assets Fairly
It's a fact: fights over money are especially common when a family is settling a loved one's estate. Emotions get in the way, old feelings of insecurity or anger often crop up, and before you know it, loving siblings aren't speaking to each other because of who got what in Mom or Dad's will.
Don't let this happen to your family. Here are 3 tips for making sure your kids don't fight over your estate:
1. Be open and honest about your wishes. It sounds self-explanatory, but many of the hurt feelings that accompany a reading of the will come from your family's expectations. If all of your kids expect to inherit equal shares of your business, for example, but only one of them has the interest, drive, and talent to keep the business running, be clear about the fact that you want to leave that business to your entrepreneurial child. Your other children won't feel short-changed if you use tip #2, below, to make sure they're provided for, too.
2. Use life insurance for estate equalization. Using the example above, let's say you leave one child 100% ownership of your small business. What's left for your other child? If you buy a permanent life insurance policy, you can select a policy value that's equivalent to the worth of the business (or other asset that's hard to divide, such as a family home). Name the other child as your beneficiary, and then both children inherit items of equal value: one gets the business, and one gets the death benefit.
3. Keep your documents up to date. Many parents and grandparents forget to update their life insurance beneficiary list and their will. It's important to be sure you look at these documents at least once a year and make sure the right people are still included. Divorces, births, deaths, a falling out..there are lots of reasons why you may need to add or remove people from your will or beneficiary list. This is part of your responsibility as a parent. Ignoring this important task can lead to hurt feelings, fights, or even legal action between your family members after you're gone. I'm sure this isn't what you want at all!
If it seems like a painful task to think about dividing your estate, just remember that the reason you're doing it is because you love your family. Together, we can find a way to equalize your estate and make transferring your wealth to the next generation a smooth process.