Separate but Equal

Parents often try to “equalize” distributions to avoid upsetting their children, but you may be able to suggest a different solution that will be more beneficial for everyone. For example, clients of Rick Kahler’s wanted to give one of their four children $30,000 as a down payment to buy a home. In order not to be unfair to the others, they asked Rick, a financial planner in Rapid City, South Dakota, if they could afford to withdraw $120,000 to make gifts to all four kids.

Feeling that this move would compromise their financial security, Rick suggested instead that they make a no-interest, open-ended $30,000 loan to the child who wanted to buy a house. They could then write a codicil to their will stating that all loans would be forgiven at their death, and that an equal amount (adjusted for inflation) would be distributed to the other children.