Navigating Advances on Inheritances: The Right Way to Ensure Fair Distribution

Advances on inheritances can be complicated.
When parents and grandparents provide funds to one child over another, whether as a loan or a gift, it's crucial to consider the implications for future inheritances.
Considerations for unequal distributions
Parents and grandparents often find themselves in situations where one child requires more financial assistance than another. This can be due to various reasons, such as different career paths, health issues, or unforeseen life events.
Balancing the scales
If a family member wishes to equalize inheritances among their descendants, careful planning is essential.
Example of a family scenario
Let's say Grandma loaned different amounts to her grandchildren and now wants to adjust their inheritances accordingly.
The correct approach
In such cases, it's important to treat the loans as accounts receivable against the eventual inheritance.
Documenting the details
Having a well-drafted trust that outlines how advances on inheritances are to be handled is crucial.
Avoiding future disputes
Clearly specifying the terms of any loans or advances in writing can help prevent misunderstandings and conflicts among heirs.
Conclusion
Generosity is commendable, but clarity and proper planning are crucial when it comes to managing advances on inheritances. By taking the right steps and seeking professional advice, families can ensure fairness and harmony in their estate planning. Teresa J. Rhyne is an experienced estate planning attorney and best-selling author, offering valuable insights into this complex aspect of wealth management.