Equitable inheritance
Equitable inheritance describes distributing property among heirs based on what is fair in light of their circumstances. For owners of businesses, real estate and private investments, the term distinguishes distributions based on fairness from distributions that give each beneficiary the same amount. Practitioner commentary relates distribution choices to family circumstances, business circumstances and client objectives.
How it works
Equal distributions give each beneficiary the same dollar amount. Equitable distributions focus on what is fair in light of beneficiaries' circumstances and the client's objectives.
Estate planning practitioners describe parents discussing succession with their children and choosing an approach based on the business and family circumstances.
Where it shows up for owners of businesses, real estate and private investments
Farm and ranch succession can involve a future operating heir receiving a larger portion, particularly when that heir contributed to the operation's financial success. Practitioners note that equal treatment may prevent continued operation of the farm or ranch.
Business succession discussions can involve how children receive shares in a family operation. Practitioners regard the approach as depending on the circumstances of the business and family.
Points that are easy to confuse
Equal treatment refers to beneficiaries receiving the same amount. Equitable treatment concerns what is fair given their circumstances, so the terms describe different distribution concepts.
Common questions
Does equitable inheritance mean each heir receives the same amount?
No. Equal distributions give beneficiaries the same dollar amount, while equitable distributions focus on what is fair in light of circumstances and client objectives.
What can affect a farm or ranch inheritance distribution?
Practitioners point to the future operating heir's contribution to the operation's financial success as relevant to a larger portion.