asset).
In many situations, this method of dividing the assets isn’t a problem. If the children are close in age and have similar financial needs, then allocatingthe assets equally may result in a fair outcome. If the children are not similar in age however, or if one of them develops an expected financial need due to an injury or a disability, then it could pose a very big problem.
Suppose one child is 16 and the other is 21 upon the death of the parent and the 21 year old had his entire college education paid for. The child who is 16 will have to use most of his inheritance to pay for college, while the 21 year old will essentially receive a windfall.
In another scenario, one child might develop a disability or other medical issues. The child’s medical or therapeutic expenses would be paid for out of his individual account, which could not be offset by transferring money from the account of the other child. Those expenses could substantially or even completely deplete the account of the child who has incurred the hardship and may need greater financial support throughout his or her life, while the other child may be in a situation in which no such support is necessary.
The default rule for assets left to children is a strict equal division, regardless of the circumstances; however as parents, we allocate assets based on need and fairness, which doesn’t always result in an equal division. You can replicate this type of spending by leaving your assets to your children in a trust so that the trustee can allocate the assets to either child, according to each child’s need. This allows the trustee to save money for the younger child’s education or allocate money to a special fund if one of the children develops a disability.
When the youngest child reaches a specified age (usually 30), the assets remaining in the trust would be divided equally among the children.