Research in the United States has consistently shown that the vast majority of parents intend to divide their estates equally among their children (there appears to be far less research on the topic in Canada). Intriguingly, this is in contrast with inter vivos transfers – research has shown that children are less likely to be treated equally by their parents while they are still alive. The theory for this discrepancy is that parental bequests can be seen as a signal for parental affection, and while bequests in a will are highly visible, those by inter vivos are not (although this is, of course, not a rule).
A recent paper published by the National Bureau for Economic Research suggests that despite earlier research, unequal bequests (for the paper, the term appears to be intended to include residual gifts) seem to becoming more common in wills. The reasons for the shift are less clear, nor is it clear whether the trend will continue. Using data from the Health and Retirement Study, a nationally representative survey of Americans over the age of 50, the authors were able to show that the proportion of those who treated their children unequally in a will rose from 16 percent to 35 percent from 1995 to 2010. The increase was found in both mothers and fathers, and was true for different age cohorts.
Certain family dynamics appear to play a role in an unequal distribution of an estate. When a family had at least one genetic child and one stepchild, there is a considerably lower likelihood of an intention to give equal bequests. The effect was even stronger for divorced fathers and mothers. Another variable that strongly correlated with unequal distribution was where the parent had no contact with their genetic child. In that situation, parents were 25 to 30 percent less likely to say they would distribute their estate evenly. There appears to be no difference with how a parent with a stepchild or genetic child treated a child which they had no contact with – both were equally likely to not be included in the will.
Another finding of the researchers was that 42 percent of respondents did not have a will. This large proportion is similar to Canadian statistics, which suggests that the paper’s conclusions may have some applicability to the Canadian situation.
The authors conclude that it appears that complex families (which the authors define as families with either stepchildren or children with no contact with their parents) have a substantially higher chance of intending, and having, an unequal distribution of their estate. Recent demographic changes in marriage, divorce, and remarriage likely play a significant role in the changing nature of wills. With an aging population, and the oldest of the baby boomer generation reaching 70, and a changing North American family dynamic, unequal wills may portend a rise in estate litigation in the coming years.
