Episode 64: How to be Fair to Your Children in Your Estate Plan
Episode 64
Host: Jill Mastroianni
How to be Fair to Your Children in Your Estate Plan
What happens when you give one child a house during your lifetime but want to keep your estate plan “equal” later? In this Tuesday Triage episode, Jill answers a listener question about lifetime gifts, equalizing inheritances, and how beneficiary designations can complicate even the best intentions. Through practical examples, Michigan law, and a real court case, this episode explains why documentation matters when fairness between children is at stake.
What You’ll Learn in This Episode
A lifetime gift to one child does not automatically count toward that child’s inheritance.
In Michigan, when a person has a Will, this concept is called ademption by satisfaction.
For a lifetime gift to count toward inheritance, there must be written evidence of intent.
That writing can come from: (i) the Will itself, (ii) contemporaneous written statement by the parent, and (iii) written acknowledgment by the child receiving the gift
Beneficiary designations override the Will, which can make equalization difficult.
Equalization clauses in a Will generally cannot control non-probate assets.
One strategy to allow equalization is to name the estate as beneficiary of certain accounts, bringing them under the Will’s control.
The value of a lifetime gift is typically measured when the recipient receives it, not at death.
Appreciation and the time value of money can make “equal” distributions feel unequal later.
Clear documentation helps prevent family conflict and litigation.
Resources & Links
Sample provision equalization clause: https://drive.google.com/file/d/1sl10acDgZ9hxhwxJGHO17NYbB9DE633A/view?usp=drivesdk
Episode 59: Why Selling the Lake House Can Rewrite Your Will: https://www.deathreadiness.com/podcast/59
Connect with Jill:
Website: DeathReadiness.com
Email: jill@deathreadiness.com
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What happens when you give one child a house during your lifetime but want everything to stay “equal” later? Today, we unpack how lifetime gifts interact with a Will and why beneficiary designations can complicate equalization. We’ll walk through real numbers, real planning decisions, and a real court case that shows how quickly good intentions can turn into litigation. If you’ve ever wondered how to keep things fair between your children, this episode is for you.
Welcome to the Death Readiness Podcast. This is not your dad’s estate planning podcast. I’m Jill Mastroianni, former estate attorney, current realist, and your guide to wills, trusts, probate and the conversations no one wants to have. If your Google search history includes, “Do I need a trust?” “What exactly is probate?” and “Am I supposed to do something with mom’s Will?” you’re in the right place.
Before we get started, with Valentine’s Day coming up, I want to remind you that planning is one of the most loving things you can do for your family. Maybe it’s not the most romantic message, but it’s definitely one of the most meaningful.
The Death Readiness Playbook is designed to help you organize your documents, your information, and your wishes so the people you love aren’t left guessing someday.
If getting prepared has been sitting on your “I’ll do it later” list, this is your sign.
Use the code LOVE, L-O-V-E, for $5 off The Death Readiness Playbook this week at deathreadiness.com/playbook. That’s deathreadiness.com/playbook.
I got an early Valentine’s Day gift on Sunday. My daughter and I drove to Detroit Dog Rescue to pick up a puppy named Boots. We already have three dogs, but I’d been thinking a lot about how our family could meaningfully give back to our community. Fostering a puppyfelt like something we could do together. My daughter April was immediately on board. My husband agreed after I framed it as community service.
We definitely don’t have the capacity for a fourth dog permanently — at least that’s what I keep repeating to myself as Boots sleeps next to me while I record this episode. She’s safe, she’s warm, and I hope that’s the trajectory of her life from here.
Earlier today, I decided to take all four dogs for a walk. In my mind, Boots would simply follow the lead of the other three and we’d stroll through Royal Oak in calm, orderly formation.
That is not what happened.
Within one block, one dog was barking at a dog across the street, another chose that exact moment to climb onto a snowbank and poop, a third joined the barking chaos, and Boots, understandably frightened and overwhelmed, tried to climb up my leg while the leashes wrapped around and through my legs.
It was complete chaos. And, it wasn’t too unlike something I see a lot in estate planning.
We imagine that when money, grief, and family history collide, everything will work itself out. That our children will naturally “keep things fair.” That everyone will interpret gifts and intentions the same way we do.
But assumptions about fairness and good intentions, like assumptions about four dogs walking calmly together, don’t always hold up in real life.
And that’s exactly why Jessica from Michigan wrote in.
She’s thinking about giving her house to one of her children while she’s still alive, and she wants to make sure she doesn’t accidentally create conflict later. Instead of assuming everything will work itself out, she’s asking the question first.
And that’s what today’s Tuesday Triage is about.
Jessica’s husband passed away a few years ago. Her son and his family recently relocated to Michigan and are living with her while they look for a home of their own. Jessica is ready to downsize into something that’s smaller and easier to maintain, and she’s considering gifting her current home to her son.
But she wants to be thoughtful about it.
Jessica’s Will currently divides her estate equally among her three children. So her question is:
If she gives her son the house now, does she need to change her Will?
For purposes of this episode, let’s call Jessica’s son Ben.
Before we get to the practical answer, let’s talk about the term the law uses for a situation like this.
When someone gives a child a gift during their lifetime and intends it to count toward that child’s inheritance, that’s generally called an advancement, essentially an early payment on an inheritance. In Jessica’s situation, gifting the house to Ben could function as an advancement on his one-third share of her estate.
In Michigan, the term advancement typically applies only when someone dies without a Will. Because Jessica does have a Will, Michigan law uses a different term for this concept: ademption by satisfaction.
You might remember the word ademption from Episode 59, Why Selling the Lake House Can Rewrite Your Will.
Ademption is the general rule that says if a Will makes a specific gift — like “my house on Blackberry Lane to my son Ben” — and the person dies no longer owning that asset, the gift fails.
In plain English: you can’t give away what you don’t own.
Michigan treats ademption a little differently than many other states, and I’ll link to that episode in the show notes if you want to go deeper on that topic.
But today, we’re talking about ademption by satisfaction.
If Jessica gives Ben the house now, how can she make sure that gift counts toward his inheritance later?
Let’s look at what Michigan law requires.
Under Michigan law, a lifetime gift is treated as a satisfaction, or partial satisfaction, of a child’s inheritance, only if there is written evidence showing that intent.
This written evidence can be provided in one of three ways:
First, Jessica could address it directly in her Will, stating that the gift should be deducted from Ben’s share.
Second, Jessica could create what the law calls a quote “contemporaneous writing,” essentially a signed document explaining that the gift is meant to count toward Ben’s inheritance, or that the value of the house should be deducted from his one-third share.
Third, Ben himself could sign a written acknowledgment that the gift is meant to count toward his inheritance.
So what does this look like in practice?
Let’s go back to Jessica’s goal.
She wants to give Ben the house now, but after she dies, she wants all three of her children to receive equal value from her estate.
My strong preference would be to revise Jessica’s Will so that everything related to lifetime gifts and equalization is handled in one legally binding document. That way, there’s no confusion later.
Imagine that at Jessica’s death her estate consists of the following assets:
An IRA worth $1.2 million
A brokerage account worth $900,000
And a home worth $300,000
Jessica has named each of her three children as one-third beneficiaries of both the IRA and the brokerage account. Because those accounts have beneficiary designations, they are non-probate assets, meaning they pass directly to the children and are not controlled by Jessica’s Will.
And that creates the equalization problem.
Even if Jessica writes in her Will that Ben’s earlier gift should be deducted from his share, the IRA and the brokerage account are already set to distribute equally.
So here’s what happens under the current plan:
Each of Jessica’s children, including Ben, gets 1/3 of the $1.2 million IRA, so $400,000 each.
Each of Jessica’s children, including Ben, gets 1/3 of the $900,000 brokerage account, so $300,000 each.
The only asset passing under Jessica’s Will is the $300,000 home she purchased after downsizing.
So now we ask the key question:
How do we equalize Ben’s earlier gift?
First, we need to know the value of the house Jessica gave Ben during her lifetime. If Jessica doesn’t specify a value, Michigan law fills in the gap.
Michigan law says that for purposes of partial satisfaction, quote “property given during the testator's lifetime is valued as of the time the devisee came into possession or enjoyment of the property […].”
So if Jessica gives Ben the house today, the value used for equalization purposes is the value at the time of the gift, not at Jessica’s death.
That sounds simple but it can be problematic.
Home values aren’t always clear. When we sold our house in Nashville, we listed it based on comparable sales and a recent appraisal. Months later, we sold it for more than $100,000 less than what we originally believed it was worth.
That’s exactly why Jessica should specify a value in writing when she updates her Will — so no one is left arguing about it later.
For this example, let’s assume Jessica’s updated Will states that the value of the house gifted to Ben is $600,000.
Now let’s look at what happens.
Ben has already received his one-third share of the IRA and brokerage account, just like his siblings. The only asset passing under the Will is Jessica’s downsized home worth $300,000.
If that home is divided equally, each child’s share would be about $100,000.
But because Ben already received a $600,000 lifetime gift, that gift is treated as satisfying his share of the probate estate.
So Ben does not receive any portion of the downsized house under the Will.
And this is where something starts to feel a little off.
Ben received a house worth $600,000, but the equalization under the Will only reduces his inheritance by $100,000. The so-called “equalization” isn’t so equal after all.
So how could Jessica fix this?
The challenge is that two of Jessica’s largest assets, the IRA and the brokerage account, are not controlled by her Will. They pass by beneficiary designation.
Could Jessica add equalization instructions directly into those beneficiary designations?
No. Beneficiary designations typically require fixed percentages for each beneficiary. For example, Jessica’s beneficiary designation forms would say something like 33⅓% to Ben and 33⅓% to each of her other children. There’s no place to add equalization instructions.
So if equalization won’t work through beneficiary designations, what’s another option?
One possibility is to bring certain assets back under the control of the Will; in other words, make them probate assets.
That can be done by naming a single beneficiary instead of the children individually. For example, in order to bring the IRA or the brokerage account back under the control of the Will, the beneficiary could be changed to quote “Estate of Jessica Smith.”
That would cause the asset to pass through the Will, where equalization language could actually work.
Now, does that solve the problem?
Not entirely.
For reasons beyond the scope of today’s Tuesday Triage, and which I will later address in another Tuesday Triage episode, I would generally prefer to keep Jessica’s children named directly as beneficiaries of the IRA. But I would strongly consider changing the beneficiary of the brokerage account from the three children to Estate of Jessica Smith so that equalization can happen under the Will.
Okay, now we’re working with a revised set of facts.
At Jessica’s death, her estate consists of:
An IRA worth $1.2 million
A brokerage account worth $900,000, and
A home worth $300,000
Jessica has named her three children as equal one-third beneficiaries of the IRA, so the IRA remains a non-probate asset and passes directly to the children — $400,000 each.
But now the brokerage account names “Estate of Jessica Smith” as the beneficiary, which means it becomes a probate asset and is distributed according to the Will.
Jessica also owns her $300,000 downsized home that passes under Jessica’s Will.
So under the Will, we now have:
The $900,000 brokerage account and
The $300,000 home
That’s 1.2 million dollars passing through the Will.
And remember, we’re treating the house Jessica gifted to Ben during her lifetime as having a value of $600,000.
So how do we equalize?
Here’s how I would approach it.
First, take the $1.2 million passing under the Will and add the $600,000 lifetime gift to Ben.
That gives us a total of $1.8 million to divide among Jessica’s three children.
Divide $1.8 million by three, and each child’s share is $600,000.
Now we adjust for Ben’s earlier gift.
Ben’s calculated share is $600,000, but he already received $600,000 during Jessica’s lifetime.
So we subtract that prior $600,000 gift from his $600,000 share. The result is that Ben doesn’t receive anything under the Will.
And just to keep the numbers straight: the IRA distributions still happen separately, with each child receiving $400,000 from that account.
If you’re curious what this kind of equalization clause actually looks like in writing, I’ve included sample language in the show notes.
Now, I want to pause and ask an important question:
Is the calculation we just walked through actually fair?
Imagine Jessica is 65 when she gifts Ben a house worth $600,000. She lives another 30 years. By the time she dies, that house might be worth 1.5 million dollars.
The equalization clause we discussed doesn’t account for appreciation or for something called the time value of money.
The time value of money is the idea that money available today is more valuable than the same amount later, because it has time to grow through investment or appreciation.
For example, if you receive $100,000 today, you can invest it and let it grow. If you receive that same $100,000 thirty years from now, you’ve lost thirty years of potential growth. That difference is the time value of money.
So even when families are trying to “keep things equal,” the reality can be more complicated.
And if this still sounds theoretical, let me tell you about a real Michigan case involving the Gregory Hall Trust.
Gregory Hall had three children — Kenneth, Cheryl, and Michael. He died in 2018 with an estate worth about $6 million dollars. During his lifetime, Gregory transferred his home, valued at about $500,000, to Kenneth.
Before making the transfer in 2014, Gregory created an Excel spreadsheet listing the value of his estate. After Gregory gave his home to his son Kenneth, he updated the spreadsheet to include a “Distribution” section reflecting the transfer to Kenneth.
After Gregory died, Kenneth’s siblings argued that the house should count as an advancement against Kenneth’s share of the trust. Kenneth argued it was simply a separate gift.
What followed was years of litigation.
In December 2019, Cheryl and Michael asked the trial court to approve a distribution plan treating the house transfer as a $500,000 advancement. In July 2022, more than two years later, the trial court entered a default judgment against Kenneth as a discovery sanction after finding his refusal to produce records to beboth persistent and egregious.
In March 2023, the Michigan Court of Appeals upheld that decision and treated the house transfer as a partial satisfaction of his 1/3 share of his father’s estate.
Think about that timeline:
Gregory gave his son a gift in 2014.
Gregory died in 2018.
Years of litigation ended in 2023.
That’s years of family conflict over one lifetime gift.
And that’s exactly what Jessica is trying to avoid.
At the beginning of this episode, I told you about trying to walk four dogs in perfect formation. I assumed it would work itself out. Instead, it was chaos.
Estate planning assumptions can work the same way. We assume our intentions will be understood, that our children will “figure it out,” and that fairness will be obvious.
But the law works on clear documentation, not assumptions.
For Jessica, my suggestion is to review the sample equalization clause in the show notes and make an appointment with your attorney to update your Will. Be explicit about whether the gift should count toward inheritance and how the value should be determined.
Because when wishes are clear, families don’t have to guess.
If your estate plan exists in pieces — a Will here, beneficiary forms there, conversations in your head — The Death Readiness Playbook helps you connect it all.
With Valentine’s Day this week, it’s a good reminder that love isn’t just what we say — it’s how we prepare. Getting organized is one of the most meaningful ways to care for the people who will one day be navigating life without you.
If you’ve been meaning to get started, this is a great time.
Use the code LOVE, L-O-V-E, for $5 off the Death Readiness Playbook this week.
Check it out at deathreadiness.com/playbook. That’s deathreadiness.com/playbook.
Thanks for listening today.
This is Death Readiness, real, messy and yours to own. I’m Jill Mastroianni and I’m here to help you sort through it, especially when you don’t know where to start.
Hi, I'm April, Jill's daughter. Thanks for listening to The Death Readiness Podcast. While my mom is an attorney, she’s not your attorney. The Death Readiness Podcast is for educational and entertainment purposes only. It does not provide legal advice. For legal guidance tailored to your unique situation, consult with a licensed attorney in your state. To learn more about the services my mom offers, visit DeathReadiness.com.
