- Consider having an open discussion about dividing assets between family members to ensure everyone understands the decision and feels comfortable with the outcome.
- Statistics show that inheritance is a common issue in families, and nearly two-thirds of households reported having to divide up some portion of their estate among multiple children.
- When splitting wealth and assets among family members, consider real estate properties, valuable possessions, and possibly hiring a professional administrator.
- Open dialogue within families allows individuals to express their wants, needs, and potential concerns while understanding their financial situations better to ensure equitable distribution of resources.
Splitting wealth and assets among family members can be controversial for many reasons. First, it is an issue that involves emotions and financial considerations, making it difficult to discuss objectively. Additionally, depending on the family structure and the dynamics between the individuals, there may be unequal levels of involvement or influence in decision-making processes which can further add complexity to this contentious subject.
Statistics illustrate how common this issue is in families. A recent survey conducted by the Federal Reserve Board revealed that nearly one-quarter of all U.S. households have some inheritance from a parent or other relative. In addition, almost two-thirds of these households reported having to divide at least some portion of their estate among multiple children. Furthermore, more than half of those surveyed said they disagreed with their siblings over dividing up inheritance money or other assets such as real estate or artwork.
Though it can be seen as a personal matter for families to decide amongst themselves, many factors must be considered when splitting wealth and assets between children. Here are a few to consider.
Having an Open Discussion
Open discussion about dividing assets between family members is essential for various reasons. First and foremost, ensuring that all parties are on the same page, understand the reasoning behind the decision, and feel comfortable with the outcome is vital. Open communication within families allows children to express their wants, needs, and potential concerns without feeling like they must agree with their siblings or parent(s). This can be especially critical if one child has more financial responsibility than another. Additionally, discussing the issue openly allows individuals to voice their opinions on how money should be divided equitably and fairly according to each individual’s unique circumstances.
Furthermore, an open discussion regarding siblings dividing assets enables them to understand their financial situations better. For example, if one child was gifted a significant investment from their parents, but the other sibling received nothing or had to wait significantly longer for their inheritance, it may be beneficial for them to discuss why this happened. Without an open dialogue about such matters, feelings of inequality could lead to resentment and further conflict.
From a practical standpoint, everyone involved in the process must understand precisely what assets are being divided up and how they will be distributed (i.e., who gets what). This ensures that there is no confusion or surprises in the future about who has rights or access to which resources. For instance, if two siblings decide to split their parent’s real estate equally but do not designate who gets which piece of property in writing, there could be issues further down the line if both siblings want the same house.
Getting a Complete Overview of Assets
It is essential to have a clear understanding of the assets that are being divided before making any decisions. This requires having documents such as bank statements, investment accounts, or real estate certificates available for review. Here are a few to consider:
Real Estate Properties
The family home is perhaps one of the most contested assets when dividing an inheritance. If the family home has been inherited, it is essential to determine who will be responsible for paying taxes and other related costs such as maintenance or repairs.
Suppose rental properties are part of the inherited estate. In that case, it is essential to understand who will be responsible for the upkeep, management, or financial obligations before deciding how to divide them up. Additionally, families should consider
Investments and Retirement Accounts
If investments or retirement accounts are part of the inheritance, it is essential to understand how taxes on these assets will be handled before deciding how to divide them. Additionally, families should consider if transferring a portion of the investment into another sibling’s name is beneficial for all parties involved.
Jewelry, rare collections, and other valuable possessions often hold sentimental value for family members. When dividing assets, it may be necessary to assess the monetary value of these items and then decide if they should be given out fairly (e.g., each sibling gets an equal share) or if one individual should take responsibility for them due to their relationship with the particular item.
Hiring an Administrator
Wealth and assets can be incredibly complex, and dividing them among multiple family members can be just as challenging. Hiring a professional administrator may be beneficial to ensure that everyone understands what is at stake and feels like their interests are being represented fairly. An administrator can help families divide assets equitably while providing guidance and expertise. The estate of administration will also help ensure that all assets are distributed according to the wishes of the deceased or family.
Ultimately, there is no one-size-fits-all solution when it comes time to divide wealth and assets between children or other family members. Families must consider their unique circumstances and weigh various factors before deciding how best to proceed. Having an open discussion about expectations, understanding which assets are being divided, and potentially hiring a professional administrator can help families navigate this process to reach a satisfactory outcome.