Fair vs. Equal: Be Ultra-Careful with Unequal Inheritances

One of the thorniest issues in estate planning is the age-old question of fair vs. equal. Should you always split an inheritance equally among your kids, or are there situations where an unequal division may actually be more fair? I’ve covered this topic numerous times before in prior posts, but it always merits reconsideration.

I referred to the work of Family Consultant Jeff Savlov a couple of weeks ago in a post about procrastination. I return to Jeff’s expertise today for the excellent way he addressed this dicey topic in his March 2024 article “Fairness, Once Again.” Like all estate counselors, Jeff recognizes that what may appear unfair may actually be fair once you know the whole context. As Relational Consultant Byron Gossett writes in his book Expand the Frame, you have to look at the big picture before you pass judgment, expanding out from the narrow frame where things may appear to be unfair. Savlov cleverly shows two boys, one with a big piece of cake and the other with a little piece. He then offers three scenarios to explain why this may actually be fair after all. “Fairness is not always a 50/50 split of the assets under consideration.”

Savlov goes on to give a personal example where their older son has a job with great health insurance while the other son is a personal trainer with no health insurance. Savlov and his wife added the younger son to their policy and agreed to pay for his coverage. Aware this could ruffle feathers with their older son, they did the smart thing. They engaged in open communication with their sons, receiving a seal of approval. But when it comes to dividing an inheritance unequally at death, proceed with caution. As Savlov illustrates, parents of a prominent surgeon considered leaving more to the less successful child who didn’t put in the hard work it took for the surgeon to succeed. As I’ve witnessed in my own practice, “The surgeon child, in this example, may not need the parents’ assets, but often feels unfairly treated or even less loved.” There isn’t an obvious right or wrong here, but I recommend Savlov’s approach to have open communication and avoid surprises when it comes time to read the Will.

Here’s a recent case involving the billionaire family of Hubert Neumann that carries the consequences of an unequal inheritance to the extreme. Kelly Crow tells the horror story of the Neumann family in her Wall Street Journal article of Feb. 3, 2024. When their mother Dolores died, the three Neumann daughters discovered a “bombshell.” Dolores left her mega-millions of dollars’ worth of art (including one painting that was “the crown jewel” of the estate) entirely to daughter Belinda. Daughter Melissa (who was independently wealthy) was devastated to learn that her share of the estate was capped at $1 million, which she’d forfeit if she contested the Will. “‘We’re sisters,’ Melissa remembers Belinda saying, reaching over to squeeze her arm. ‘We’ll get through this.’” Easy for Belinda to feel that way, but suffice to say, they didn’t get through it. Things got really ugly after the hurt of that unequal bequest.

Their father Hubert was equally shocked by the unequal division and sided with Melissa. “But in the eight years since his wife’s Will was read, his family has descended into a feud with at least 18 lawsuits exchanged among them…. [Belinda] tried to oust her father as manager of their family’s estimated $1 billion art trust.” It gets worse. Belinda and her father Hubert were sharing a residence when Hubert went to court and got an order to evict her. Belinda’s husband showed up and claimed Hubert “just shoved me into a set of doors,” leading to Hubert’s arrest. Hubert was led out of his own residence in handcuffs and “slept on the cement floor of Manhattan’s 23rd Precinct.”

Melissa and Hubert filed a Will contest, but the court upheld Dolores’ Will. Melissa and Hubert have filed an appeal. In another action, the court denied Belinda’s effort to remove her father as managing trustee. “Melissa mostly goes to art shows alone now, or occasionally with her father. She hasn’t spoken to Belinda in years.” What’s perhaps worse is that the family’s dirty laundry is on display now for the entire world to see. All hope for passing down a meaningful legacy to the next generation is destroyed.

I’ll repeat: unequal inheritances are fraught with risk. If you’re going down that path, proceed with caution!

Unequal inheritances may be “fair,” but they are also highly risky. Be careful to avoid a family feud like the one that erupted in the Neumann family when daughter Melissa (pictured here with father Hubert) received far less from her mother’s Will than sister Belinda.