Ethan R. Okura
Hawai‘i Herald Columnist
Last month, we discussed why children sometimes fight over money or property after their parents die. We discussed the advantages of letting your children know who will get what, so that there will be no surprises. Today I would like to continue with Part 2 of my father, Sanford’s discussion on this topic. Here are his thoughts.
When I was a law student many years ago, I took a class on wills and estates. The professor was an elderly gentleman with much knowledge on the subject; he had written the textbook we used for that class. On the first day of class he said, “There are two rules in wills and estates. The first rule is that everyone is greedy. The second rule is that it only takes a buck.” What he meant is that it only takes one dollar for heirs to fight over money when a person dies. Fortunately, I have found that this is not always true.
Our law office once handled a case in which the parents died while still owning a house in Honolulu. The parents hadn’t done any estate planning. The property had to go through court for probate. The house was to go in equal shares to their four children. Two daughters lived in the house. The children agreed that it made sense for one of the daughters to own the house, and the other three children voluntarily gave up their shares to their sister. I imagine their parents must have been smiling with joy in heaven as they saw the harmony and unselfishness among their children.
Unfortunately, children don’t always get along that nicely. I know a man who regularly gave money to his elderly mother after his father died. His mother didn’t really need the money, so she put it into a savings account in her name and her son’s name. When she died, the money went back to the son who had given it to her. This is what his mother wanted. However, she had not told her other children about the savings account. One of her sons accused his brother of taking their mother’s money. He didn’t know that his brother had gotten the money because he had given it to his mother in the first place. The two brothers got angry at each other and never talked to each other again.
How sad to have this kind of family problem because of a lack of communication. If the mother had told her children why she put the name of only one son on the savings account, there would have been no misunderstanding. Perhaps there could have been harmony in the family after their mother died. This is why it is helpful to tell your children who will get what when you die, so that there will be no surprises after the funeral.
If all of the children get equal shares of everything when their parents pass away, there is less of a chance for arguments among the children. However, equal is not always fair. If one child gives money to the parent, it may be fair for that child to get that amount back when the parent dies, and then divide up everything else equally among the children.
What if one child takes care of an elderly parent? Should that child receive a larger inheritance than the other children? That is a difficult question. There is no right or wrong answer to a question like this. In some families, one child makes great sacrifices to help an aged parent, but only gets equal shares with the other children. In other families, the child who helps the parent receives a larger inheritance than the others. Every family is different; the parent has to decide what is fair.
Another situation that can be difficult is where one child is financially secure and another child is struggling financially. Should both children get equal shares, or should the parent give more to the child who is struggling? Again, there is no right or wrong. It is best if the family is able to have a discussion about what is fair. Hopefully, this will reduce the chance of misunderstandings and arguments when the parents are gone. However, remember that the assets belong to the parents. They can give it to whomever they choose.
Ethan R. Okura received his JD from Columbia University in 2002. He specializes in Estate Planning to protect assets from nursing-home costs, probate, estate taxes and creditors.
This column is for general information only and is not tax or legal advice. The facts of your case may change the advice given. Do not rely on the information in this column without consulting an estate-planning specialist.
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