Equal Is Not Always Fair
One of the most common responses when inheritance comes into a financial planning conversation is also one of the most understandable: “We’ll just divide everything equally between the children.”
On the surface, it is difficult to argue with. Equal feels fair. It avoids any suggestion of favouritism and allows parents to believe that they have treated their children in precisely the same way.
The difficulty is that children are rarely in precisely the same position.
One may have built a successful career and accumulated considerable financial security, while another may be struggling to buy a home or raising a young family on a relatively modest income. Health, relationships, financial capability and personal circumstances can all be very different. Those differences do not necessarily mean that parents should give their children different amounts, but they do make it reasonable to ask whether equality and fairness are always the same thing.
Imagine that one child has won the lottery while the other is a struggling teacher. Is leaving them exactly the same amount still fair?
There is no universally correct answer to that question. Some parents will feel very strongly that it is. Their wealth belongs to them and treating their children equally may be an important principle that they do not want circumstances to disturb. Other parents may look at the needs of their children and arrive at a different conclusion.
The important part of the advice process is not deciding which answer is right. It is creating enough space for clients to consider what they actually mean when they say they want to be fair.
Fairness during life, not simply at death
The conversation becomes particularly interesting when parents have more wealth than they are ever likely to need themselves.
At that point, inheritance does not necessarily have to be something that happens after death. If a child could genuinely benefit from financial help today, there is a reasonable question about whether waiting another twenty or thirty years is actually achieving what the parents want their wealth to achieve.
There are, of course, perfectly understandable reasons for holding onto money. In my experience, some of the recurring concerns are:
Fear of running out of money themselves.
Fear that giving too much will spoil their children or damage their motivation.
Fear that helping one child more than another will be seen as unfair.
The first of those can often be explored through financial planning and cashflow modelling. A client may feel that they cannot afford to give money away even though the evidence suggests otherwise. The model should not dictate the decision, but it can remove some of the uncertainty around what the client can reasonably afford.
If the numbers suggest quite clearly that the client is unlikely to need all of their wealth, I think that should lead to curiosity rather than prescription. Why do they still feel uncomfortable giving some of it away? What are they protecting themselves from? Equally, what are they worried might happen to their children if they receive money earlier?
Sometimes there will be very good answers to those questions. Sometimes simply asking them helps a client recognise that a decision they regarded as financial is actually being driven by something quite different.
I occasionally make the point rather less seriously: “Would you rather see them smile now, or just know they’ll be smiling when the will is read?”
There is a serious thought behind the joke. Money received when somebody is trying to establish a home, bring up a family, build a business or navigate another difficult period of life may have a very different value from the same money inherited decades later, when they may already be financially secure themselves.
That does not mean earlier giving is necessarily better. It means that waiting until death should be a conscious choice rather than the unquestioned default.
Keeping a tally without keeping score
This is one of the ways in which the Family Map can develop from a discovery tool into something much more useful over a long-term advice relationship.
Families provide financial support at different times and for different reasons. Over many years there may be:
House deposits.
Education costs.
Business funding.
Loans.
Help during periods of financial difficulty.
Other significant gifts or financial support.
Trying to reconstruct all of that years later can be difficult. The Family Map offers somewhere to maintain a continuing record of what has happened.
The purpose, though, is not to create a family balance sheet in which every payment to one child creates an equivalent liability to another. Keeping a tally should not become the same thing as keeping score.
What matters is understanding the reasoning behind the decision. If parents make a substantial gift to one child, an adviser can ask what prompted it and what the parents intended. Perhaps that child needed help at a particular moment. Perhaps the parents intend to take the gift into account when making future decisions. Perhaps they do not. The role of the adviser at that stage is not necessarily to challenge the decision, but to understand it and record the context in case it becomes relevant later.
That context can matter because family circumstances evolve and memories become less reliable. A decision that was entirely understandable when it was made can look very different fifteen years later if nobody remembers why it happened.
Fairness, favouritism and family conversations
The complication is that financial inequality can easily become confused with favouritism.
Parents may believe that they have reached a thoughtful and fair decision based on the particular needs of their children. The children may experience exactly the same decision very differently. The difference between those perspectives can become particularly difficult when the first time the children discover what their parents decided is after their death.
That does not mean every gift or financial decision needs to be discussed immediately with the entire family. There are circumstances in which parents will quite reasonably want to keep their decisions private. Nevertheless, where the eventual outcome could create a significant difference between children, there is value in considering whether some form of family discussion would reduce the potential for resentment, jealousy or dispute.
The aim is not necessarily to engineer an equal financial outcome. It is to help parents reach a position they regard as fair while understanding how that decision might eventually be interpreted by the people affected by it.
Sometimes achieving that will require communication. Sometimes it will require explanation. Sometimes circumstances will change sufficiently that the original decision needs to be reconsidered altogether.
A Family Map that changes with the family
This is why I do not think the Family Map should be completed at the beginning of the advice relationship and then filed away.
Families change. Children become more or less financially secure. Careers develop, marriages begin and end, businesses succeed and fail, health changes and grandchildren arrive. The circumstances upon which an apparently fair decision was based may no longer exist five or ten years later.
The annual review therefore provides an obvious opportunity to revisit the map. A very simple question can open the conversation:
“Have you given any significant financial help to any of the family since we last met?”
If the answer is yes, update the map, understand what happened and record the reasoning. Over time, this creates a financial history of the family that can inform later conversations without determining their outcome.
That distinction matters. The adviser is not there to arbitrate between siblings or decide what constitutes a fair inheritance. Nor should financial planning quietly become an exercise in telling clients how to distribute their own wealth. The adviser can challenge assumptions, model the consequences of different decisions and encourage family discourse where it might help, but ultimately the decision remains the client's.
Perhaps that is the real value of keeping the Family Map current. It gives the adviser enough context to become curious at the right moments.
When a client says that everything will simply be divided equally, the answer may indeed be that equality is exactly what they want. But it is worth exploring whether equality is being chosen because they have thought carefully about fairness, or because equal division feels like the safest way to avoid having the more difficult conversation.
The distinction becomes particularly important when significant wealth is likely to pass between generations. A perfectly equal inheritance can still leave resentment behind, just as an unequal inheritance can sometimes be understood as entirely fair.
The challenge for the adviser is therefore not simply to ask, “Have you treated your children equally?”
A more useful conversation might begin with, “What does fair look like for your family?”