DISTRIBUTING ESTATE ASSETS FAIRLY AND EQUITABLY

The estate of most individuals is worth more than just money. A family business, a summer cabin on the lake or an antique car collection may be part of a legacy, rich with family history that you want to pass to your children and grandchildren.

The challenge is to develop a plan that meets your desire to pass along specific assets to certain individuals, while making sure each family member is treated fairly and equitably. Unfortunately, these assets may not be easily dividable, may have fluctuating values and lack liquidity, as well as potential tax liabilities.
The first step in deciding how the estate is to be distributed is to determine the estate value. This takes careful planning and open discussion with advisors. Make sure to include your accountant, lawyer, real estate advisor, business valuation expert and possibly an expert in collectibles valuation. Each asset should be carefully considered with respect to its value (monetary as well as emotional) and then start to develop your plan.

Next you will need to make decisions about how estate assets will be distributed. Again this requires careful planning and open discussions with family members. If your estate value includes a small business, additional planning will be necessary. Will the business be sold to a third party or is your plan to have a family members take over the business?
If you plan is to transfer your business to family members, leaving equal shares of the business to active and non-active family members can often cause conflict. Leaving the business to only the participating family members can also cause conflict within the family.
So what to do? To keep peace within the family, one option to equalize the distribution of your estate is to leave non-business assets to non-participating family members. However, consideration needs to be given to whether those assets are liquid or present taxation issues for the heirs.
Another option is to purchase a life insurance policy to help achieve an equitable transfer of your estate. You can leave your business to participating family members and use the life insurance proceeds to provide an equitable inheritance for other family members. This allows you to then divide remaining estate assets as you wish.
The most important part of the plan is the plan itself. Make sure you have a plan that reflects your wishes.

Author

ELLEN LEHMERT
Throughout her 30 years of experience in Advanced Sales, Ellen has had the privilege of working with and learning from some of the finest planners, attorneys and accountants in the field today. At National Life Group, Ellen is Director of Advanced Sales. A former business owner, Ellen was in private practice as the principal owner of both an Advanced Planning Consulting Firm and a Law Practice that specialized in business and estate planning. Ellen has specialized in the design of business succession and non-qualified benefit plans for business owners and wealth transfer designs for high net worth clients. Ellen has authored numerous articles and has presented at many industry meetings, including the American Society of Pension Professionals and Actuaries and the Million Dollar Round Table. A native New York City resident, Ellen and her family moved to Vermont in 2011. Enjoying the 10 minute rush hour, hiking in pristine mountains and joining in community activities, Ellen has learned to love the Vermont life while still appreciating the fast pace of New York City.