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Equalizing inheritance can be tricky with a family business

Many small business owners work hard to start their business, get through the tough economic times and prosper. If a business is maintained for generations, and a daughter or son is working at the business, a parent may want to hand that business down to their child who is interested in owning it. How does a person do that without being unfair to their other children? Just because a child has worked at a family business and shares a parent's passion for it, doesn't necessarily mean that child should get more of the inheritance.

If a business is worth a majority of a person's entire estate, they may want to take certain estate planning actions to ensure the other children get an equitable inheritance without limiting the business savvy child's ability to own the business. This can be done through various life insurance mechanisms and proper estate planning documents.

In some cases, purchasing a life insurance policy that has a survivor life option. This allows insurance to be passed onto a spouse and then paid out to the children when the last of the spouses dies. This can help ensure the children all receive a share of money or the business that will be seen as fair.

The most important part of estate planning in a similar case might be talking to your children about your wishes. It could turn out that although one child works for the business and seems to enjoy it, that they actually don't want to own it. The converse could be true for the other children.

Source: Forbes, "Inheritance Equalization: Planning ahead now to reduce the burden for your kids later," Steve Parrish, Jan. 16, 2013.

-Inheritance issues can be complex and confusing. An experienced New Jersey estate planning attorney can help families find a suitable solution for addressing their wishes.

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