Equal Isn't Always Fair

Of course, families usually don't know the precise amount that will be needed to take care of a disabled child in the future. Therefore, Chicago estate-planning attorney Jay S. Goldenberg sometimes recommends they set up a convertible trust - an ordinary discretionary trust that converts to a special-needs trust if the discretionary-trust assets fall below a level set in advance. This way, the beneficiary doesn't need to live under the confines of a government program unless the trust assets fall low enough and the remaining money needs to be stretched out, he says.

Wealthy Children

Sometimes, parents will decide to leave less to a grown child because that child has made a fortune and other siblings have far more pressing needs.

Still, these cases remain rare. "In most cases in my experience, even though there's differences in what children have accumulated, the parents will treat children equally," comments Robert Clofine, an estate-planning attorney in York, Pa. "But I can think of one client in particular. They have four children. The one daughter is very, very, very well off, and instead of leaving that child anything, they left more to the other children and a little bit to the children of the daughter that was well off. From an estate-tax standpoint, it doesn't necessarily make sense to leave money to someone who has his or her own estate-tax problem. You may want to leave it in a trust for that child so that it doesn't become part of that child's estate for federal estate-tax purposes."

On occasion, adult children who are financially independent will tell their parents not to leave anything to them. "I have had situations where one of the children says, 'Mom, Dad, don't give me anything. I'm a zillionaire, and I don't need the money, so don't worry about me,' and the parents reluctantly say, 'OK,' " Stokes says. "I don't usually see parents saying, 'So and so doesn't need it, so I'm not going to give it to him,' because they have this sense that they need to be evenhanded with their children. But sometimes, a child will come back and say, 'Don't give this to me.' "

Even when children don't need their parents' money, the idea that they would give more to other siblings may not go over very well. Morlitz described a situation involving a longtime client who was worth at least $10 million three or four years ago. "He said his goal was to spend his last penny just before he died. He has three children and nine grandchildren, and he's been giving away a quarter of a million dollars a year with his annual exclusions, year after year after year. He's done a great job. And the oldest son hit it with a dotcom and is worth a lot more than Dad. The middle son teaches school, and the youngest son is a corporate executive. How do you divide that estate? Dad and Mom decided to sit down with the three children. The oldest son is worth $20 million. And they said, 'We're not going to divide it equally. They got back, 'You're penalizing success.' Right now, they're leaving it equal. The other two kids say, 'That's OK. That's the way it is.'"

"In my opinion, Dad thought that was OK, he was OK with equal," Morlitz says. "But Mom is not any way going to accept that. And her family is long-lived, and she's got just as much money as he has. My guess is that after Dad dies, we're going to see a big change. So you've even got the differences between the parents."

Estate-planning attorneys agree parents may not want to divide a business equally among children, particularly if they want the business to continue under family ownership. Disagreements between siblings about how the business should be operated could ultimately lead to its sale. Also, some parents feel a child who has been involved in the business, who helped make it grow, should be rewarded for that effort and should get a larger share, if not the whole package.

"That situation is probably one of the more difficult situations to deal with," Clofine says. "In my area, you have farms where you have one child who is a farmer in the business and the others aren't. It's pretty tough sometimes to divvy it up so there's equal treatment. So the parents often have to make a compromise between equal dollar amounts of their estates and being fair to the child who's been involved in the business."