by Matthew Lieff

Created on: February 21, 2008

The purpose of leaving what you own to your children is to help them live a better life. It is tragically ironic that sometimes, inheritances hurt more than they help, by sparking disagreements that turn into feuds that last a lifetime. The best way to avoid such problems is for parents to decide how to divide all assets beforehand, and to clearly communicate their wishes to their children. If that does not happen, the best way for all heirs to remain on good terms with each other is to agree on exactly how the assets will be apportioned before any distributions are made. In either case, clear, precise and honest communication is key.

Useful strategies for both parents and children are described below. The first two sections of this guide, "Financial Assets" and "Household Goods, " advises parents how to arrange their estate so as not to cause a rift among the children. The next three sections, "Auctions," "Round Robins," and "Other Strategies," explains how siblings can harmoniously divide their parents' worldly goods if the guidance left by the deceased is not comprehensive or clear enough to settle the issue.

For parents, three key decisions need to be made: whether to divide financial assets equally or not, what to do about real estate, and how to apportion the household goods (which may hold sentimental value).

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FINANCIAL ASSETS

EQUAL DIVISION. In ancient times, unequal division was the rule. Titled aristocrats, the only people with anything significant to leave to heirs, would usually leave most or all of their estates to the eldest son. The other children were lucky to get a small annual income, if anything at all. The purpose was to keep the family holding in one piece. For generations, the British officer corps was populated by second and third sons of landed gentry. Their elder brothers stayed home to tend the family property. In America, the customary practice is an equal division among all children. In some cases, however, parents give more to a child who needs or deserves extra help; give less to someone they believe will misuse or waste their inheritance; or attach special conditions to what is received.

SHARE AND SHARE ALIKE. In dividing financial assets, don't give shares of one stock or mutual fund to one child and shares of a different security to another. Share prices fluctuate, and the relative value of different securities can change a great deal over time. What seems like an equal division now may be a very unequal division later on.

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