C3 Financial Partners

Planning for Your Children and Grandchildren: Non-Traditional Approaches to Ensure Fairness

When it comes to planning for your children and grandchildren, fairness can be a complex goal, especially in families where some children have children of their own, while others do not.  Balancing your wishes for equality with the unique circumstances of each family member requires careful thought and creative strategies.

Below, we will explore some non-traditional approaches to planning that can help ensure everyone is treated fairly – even when fairness doesn’t mean equal treatment.

At C3 Financial Partners, we collaborate with clients and their advisors to navigate these challenges, helping to both create and execute a plan that aims to implement their planning objectives.

Understanding Fairness vs. Equality

Before diving into strategies, it’s essential to recognize the distinction between fairness and equality.  Equality means giving everyone the same amount, regardless of their circumstances.  Fairness, on the other hand, takes individual needs and situations into account, aiming to provide what’s appropriate for each person.  For instance, grandchildren may have greater financial needs for education or other expenses, while children may require support for their own retirement planning or other goals.  Or some children may choose to marry and have children, while others may not.

When the goal in planning is to be fair rather than equitable, it may require the use of various solutions and products to help achieve the desired outcome.  Let’s walk through some options that might be able to assist in this effort.

Using Life Insurance to Bridge the Gap

Life insurance can be a powerful tool to create equity among heirs without having to divide assets equally.

For example:

  • If a client plans to leave a significant portion of their estate to children who do not have kids, they can use a life insurance policy to provide an equitable inheritance for the children who do have children.
  • Alternatively, they can purchase policies specifically designed to benefit their grandchildren directly, ensuring that their futures are secure without reducing the inheritance for the client’s children.

By using life insurance strategically, resources can be allocated based on needs and priorities while avoiding family disputes over fairness.
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Creating a Family Trust

A family trust allows you to set rules and conditions for how your wealth is distributed, ensuring that your objectives are carried out fairly.  For example:

  • Generation-Skipping Trusts: These trusts can benefit grandchildren directly, bypassing their parents.  This can be particularly helpful in families where some children have larger families and greater financial demands than others.
  • Equalization Clauses: If some of your children have already received financial assistance, such as help with a down payment on a home, you can include provisions in the trust to account for those gifts and balance the scales for other heirs.

Trusts also provide flexibility to adjust distributions over time, accommodating changes in family dynamics or financial needs.

Establishing Education Funds

Education is one of the most impactful gifts you can give to your grandchildren, and setting up dedicated funds, such as 529 plans, is an excellent way to support their future.

If some of your children do not have kids yet but may in the future, you can create a “contingency” education fund that can be allocated later.  This ensures you are prepared to provide for future grandchildren without disadvantaging those who already have educational needs.

Lifetime Gifting for Future Generations

Another strategy is to make lifetime gifts directly to your grandchildren, bypassing your children altogether.  These gifts can fund:

  • Savings or investment accounts: Contributing to accounts in their names can help them build a nest egg for their future needs, such as buying a home or starting a business.
  • Life insurance policies: You can purchase permanent life insurance for your grandchildren, giving them a financial head start and providing tax-advantaged wealth transfer.

Equalizing Non-Financial Contributions

In addition to financial assets, you can create fairness by giving non-financial contributions, such as:

  • Passing down family heirlooms or sentimental items to children who may not need financial support but value these tokens of legacy.
  • Offering support in other ways, such as funding family experiences or supporting philanthropic efforts of family members, helping to create a legacy independent of children.

These contributions can be as meaningful as financial gifts and help balance perceived inequities.
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Communicating Your Intentions

One of the most critical aspects of successful family planning is clear communication.  Families often experience conflict not because of the planning itself but due to misunderstandings about the intentions behind the planning.

Consider:

  • Holding family meetings to discuss your plans and ensure everyone understands your goals.
  • Writing a letter of intent to accompany your estate documents, explaining your reasoning and demonstrating your desire to treat everyone fairly.

This transparency can prevent misunderstandings and reduce potential resentment among family members.

Coordinating with Professional Advice

Working with professionals, such as estate planning attorneys, financial advisors, and life insurance brokers, can make all the difference in crafting a comprehensive and fair plan.  They can help:

  • Navigate complex tax laws to maximize the impact of your gifts.
  • Structure your estate to minimize the risk of disputes.
  • Recommend innovative solutions tailored to your family’s unique circumstances.

A Thoughtful Approach to Legacy Planning

Every family is different, and there’s no one-size-fits-all solution for ensuring fairness.  However, by taking a thoughtful and proactive approach, you can create a plan that reflects your values and priorities while meeting the diverse needs of your children and grandchildren.

In summary, fairness doesn’t always mean equal.  It means doing what’s right for each family member.  By leveraging tools like life insurance, trusts, and lifetime gifting, you can create a legacy that provides for your loved ones in meaningful and impactful ways.

At C3 Financial Partners, we look forward to helping our clients gain clarity in their estate planning goals and objectives, confidence that they are making the right decisions as to where their legacy should go and providing coordination with their other advisors to create and implement the right plan for them.


Securities offered through Valmark Securities, Inc. member FINRA, SIPC.  Investment advisory products and services offered through Valmark Advisers, Inc., an SEC Registered Investment Advisor.  Representatives may transact business, which includes offering products and services and/or responding to inquiries, only in state(s) in which they are properly registered and/or licensed.  C3 Financial Partners is a separate entity from Valmark Securities, Inc. and Valmark Advisers, Inc.

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