When it comes to passing on your assets to your children, a Santa Clarita financial advisor says it’s okay to favor one child over another in certain situations.

One reason a parent may choose to leave a smaller inheritance for one child compared to their sibling is because of a lack of financial responsibility, according to Arif Halaby, a Certified Estate Planner and president/CEO of Total Financial Solutions.

Show Host Arif M. Halaby

“Why is it that sometimes families that are wealthy will leave money generation after generation and provide for their kids, grandkids, great grandkids for a long time,” Halaby said, “and others maybe with extra money or with wealth has it all disappear within a year or two or five?”

The average amount of time that a large inheritance or other major windfall is spent is about eight months, according to Jeff Girard, Halaby’s co-host on KHTS AM-1220’s “Total Financial Solutions Safer Money Hour.”

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“It’s taken you a lifetime to accumulate that and hand that off to somebody, and now it’s gone,” Halaby said, noting this is why it’s important to make sure you are “trusting” the right child with your wealth.

Halaby continued, “Statistically speaking, if you have two or more kids, they’re not going to be the same when it comes to the way they value and spend money. It just isn’t going to happen, especially when you add spouses involved.”

As a result, favoring the child who has demonstrated responsible financial practices during your lifetime can help ensure the money you leave behind isn’t squandered.

Another time it’s okay to favor one child over another in your will is if you’ve offered significantly more financial help to one during your lifetime, according to Halaby.

“Sometimes you will give one child a little bit more help — maybe they just can’t seem to get off of their feet, so you helped them with the down payment for a car, and you paid for their college, and you helped them with a down payment for a house,” he explained. “It’s okay to say when you pass away, ‘Hey, daughter No. 1, you  inherited your money while I was alive… The other three children didn’t get it.’”

Girard added that most parents keep what he called a “mental tab” of how much money they’ve given each child over their lifetime, and advises taking this into account when dividing up their inheritance.

“A good part of why people gift while they’re still alive is because they like to see that gift doing what it was intended to do — to help somebody, and that’s perfectly alright,” he said. “So you may have a child or grandchild that you’ve given all that help along the way, and you don’t expect anything back, but you kind of keep a little mental tab, and you say, ‘I’m not going to give them an equal (share) of whatever’s left over if you have others that you want to give that to at your passing.”

“There are things that you have to have when you are building your estate plan, your transfer of assets,” Halaby added. “You have to have an understanding that it is okay to favor one child over another.”

Total Financial Solutions offers assistance with preparing for retirement and financial planning in Santa Clarita and the surrounding valleys. Santa Clarita financial advisor Arif M. Halaby, a Certified Estate Planner, and Total Financial Solutions staff work with people of all ages, helping them protect, grow and preserve their assets through an individualized approach. Arif Halaby is also the host of “Total Financial Solutions Safer Money Hour” on KHTS AM-1220. Launched in 2004, the show offers listeners from Santa Clarita financial planning tips and guidance for dealing with today’s ever-changing financial needs.  

Total Financial Solutions, Inc.

24322 Main Street

Newhall, CA 91321

661-753-9683

800-990-7344