Preserving Family Relationships in Estate Planning | Mitigating Risk While Helping Your Kids

Why Illiquid Assets Create Problems

Illiquid assets like real estate, operating businesses, or private investments present a unique challenge. Not every heir is involved in the business. Some may have no interest in real estate or understand the value of the private equity stake. When people aren’t active participants, it makes dividing those assets uneven and often unfair.

That’s when estate planning gets tricky. One child may be actively working in the business. Another may have no involvement but still wants their fair share. Giving them each half of the business doesn’t make sense. And selling the business or property just to make things equal may not be the right solution either.

Where Insurance Can Help

This is where Steven talked about using insurance to create liquidity. It gives the estate options. Instead of being forced to liquidate illiquid assets to create fairness, life insurance can provide the flexibility to equalize the estate in a way that keeps things intact and relationships healthy.

If one child inherits the business, another can receive insurance proceeds. If one keeps the real estate, the other gets equivalent value in cash. It avoids putting people in a position where they feel short-changed or are forced into joint ownership they don’t want.

This isn’t about making every inheritance exactly equal down to the dollar, but about making it fair based on roles, relationships, and the nature of the assets.

A Quick Gut Check

One question we talked through stuck with me. How confident are you that your plan will preserve family harmony after you’re gone?

If you’re not confident, or if you pause when you try to answer that, there’s probably more to be done. You may have the documents in place. You may think the estate is large enough. But if your heirs don’t understand the plan or there isn’t enough liquidity to balance things out, you’re risking real tension.

Without clear planning, you might unintentionally leave behind a situation that puts your family in conflict, not because of bad intentions, but because things weren’t communicated or structured well.

Final Thought

If you’re unsure about how your estate would actually play out, especially when it comes to assets that aren’t easily divided, it’s worth taking a closer look. The goal is not just to transfer wealth, but to do it in a way that keeps your family’s harmony intact.

Mitigating Risk While Helping Your Kids: After college graduation, it’s natural to assume that your kids are off on their own journey, ready to steer their own financial lives. Yet, bumps in the road come, and they may end up needing a boost.

A recent survey by Savings.com found that half of parents with adult children provide regular financial assistance, spending an average of $1,474 a month per child. Planning for this possibility proactively can go a long way in protecting your own goals, like retirement and legacy plans.

As more parents cover monthly expenses or delay downsizing, the key is to build intentional safeguards around your giving. There are a variety of ways to accomplish this. One way to do this is by amassing a pool of liquid savings in a taxable investment account. Instead of dipping into retirement funds or emergency reserves, having a separate account gives you the flexibility to offer support without disrupting long-term plans.

Health savings accounts (HSAs) offer another smart layer of protection if you’re eligible. Because HSAs are tax-advantaged and can grow over time, they serve dual purposes. If you’re covering your adult child’s health plan, the HSA can buffer both their medical costs and your tax bill.

Life insurance can also play a role, specifically permanent life insurance. Unlike standard policies, these accounts build cash value that can be invested and, under certain conditions, borrowed against tax-free. It’s a way to maintain a death benefit while also accumulating a cash reserve that can help you support your child if needed.

And finally, for parents with more financial flexibility, some are choosing to purchase a second property early. That way, if their child needs housing down the line, it’s already in place. If not, it can generate rental income or be sold later, adding long-term value to your overall plan.

All of these strategies work best when they’re built in advance, not after the fact. Preparing now gives you more options later and lets you support your kids without putting your future at risk.