Fair versus equal
Considerations for navigating wealth transfer decisions
When it comes to estate planning and transferring wealth, some families believe distributing assets equally among beneficiaries is the best approach. Other families view each beneficiary as unique and plan distribution based on what seems best and fair for each. The question of “fair” versus “equal” is deeply personal, and having a roadmap can make all the difference in navigating this complex question.
When it comes to estate planning and transferring wealth, some families believe distributing assets equally among beneficiaries is the best approach. Other families view each beneficiary as unique and plan distribution based on what seems best and fair for each. The question of “fair” versus “equal” is deeply personal, and having a roadmap can make all the difference in navigating this complex question.
In our experience working with multigenerational families who are looking to pass on wealth to children and other loved ones, the question of “fair” versus “equal” can be complex. For this reason, we often suggest “equal” as a starting point. There may be cases, however, where a different basis for distributing wealth may make sense.
When “fair” isn’t always “equal”
Common scenarios where families tend to wrestle with the “fair versus equal” quandary include:
- Family members with special needs
- Children who may be in a more challenging financial position, whether related to chosen profession, education track, or cost of living
- Family business scenarios, where not all children are involved
- Tangible assets that are difficult to jointly own and manage, including artwork, collectibles or family real estate
In considering scenarios other than equal financial distribution, being clear about the basis for your decisions and thoughtfully communicating your thinking can help ensure the acceptance of your plans.
Setting the stage
It is important to emphasize that there is no right answer when it comes to the question of how best to distribute wealth. Considerations you will want to take time with include:
Family culture and values – How does your distribution plan align or differ from your shared family values and current family culture?
Current estate/wealth transition plans already in place – Are you proposing significant changes to what has already been communicated?
Complex family structures – Does your family structure (e.g., blended families) influence your decision for a fair yet financially unequal distribution?
Changed family or financial circumstances – Has there been a change that has influenced your plans, such as exponential growth in wealth, marriage, divorce, birth or other life events?
Communicating your “why”
Whether you are planning for giving during your lifetime or designing your estate plan, explaining your “why” is as important as the planning itself.
If you are giving in a way that you feel is fair but not monetarily equal and don’t explain this thinking to your children, they will fill in the blanks themselves. And their narratives may not be accurate (e.g., “He was always Dad’s favorite so he is getting more assets” or “Mom never liked my career path or my spouse and that is why they are giving us less”).
No matter the circumstance or the rationale for your decisions, communication and clarity can alleviate unnecessary conflict and promote family cohesion.
Dive deeper
For additional considerations and reflection questions around family wealth transitions, download our whitepaper, Fair versus equal: Guidelines for navigating wealth transition decisions. And speak with a UBS Financial Advisor about strategies to transfer wealth to others as part of your legacy.
See our entire Family Wealth Transitions series, which includes:
How much is enough? Guidelines for finding the right balance to reflect your family values
Who, what, when?
A communication worksheet for wealth transition conversations
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