Personal Finance

My parents want to disperse $200k of her inheritance early to my sister. I don’t think this is fair at all - what can I tell them to reconsider?

Maurie Backman

Published: January 10, 2025 12:15 pm

Key Points from 24/7 Wall St.

• Treating siblings unequally from a financial standpoint can make for a world of conflict.
• Have honest conversations as a family so there are no hard feelings.
• Make sure any early distribution of assets is accounted for in your parents’ estate plan.
• Major money decisions like this usually benefit from a second opinion. Click here to see how a qualified financial advisor can help. ^(Sponsor)

Bickering with my siblings is something I did throughout my childhood. As adults, we don’t fight like cats and dogs the way we used to — but we still find ourselves at odds from time to time. However, because none of us are reliant on our parents financially, we don’t tend to fight about money. Why would we?

The reality, though, is that some adult siblings do squabble about money. And sometimes, they fight about money that isn’t even theirs.

That’s the topic of this Reddit post I stumbled upon. One of three siblings is asking their parents for an advance on their inheritance, so to speak, so that they can buy a home in a desirable school district they otherwise wouldn’t be able to afford.

They’re requesting $200,000, which the parents could only afford to give to one sibling right now. The parent have a roughly $2 million net worth, but much of that is tied up in their primary residence.

Meanwhile, not surprisingly, the other siblings aren’t happy about the idea of only one of them getting $200,000 on the spot while the rest are forced to wait. So they want to know how to handle the situation.

It’s a matter of honesty and hard numbers

Giving one sibling a $200,000 advance on an inheritance isn’t as straightforward as it might seem. It’s not enough to say that the parents will simply deduct that sum from that sibling’s share of their estate down the line, because there’s the concept of the time value of money to consider.

A $200,000 gift today has the potential to be worth a lot more overall when you account for factors like interest, inflation, and investment gains. Here, the sibling in question wants $200,000 up front to buy a house. With mortgage rates in the 7% range, they’re not just getting $200,000 — they’re getting out of paying 7% on that sum for what could be many years.

The Redditor above notes that another sibling is paying a mortgage at a higher rate than what inflation will likely be over time. A $200,000 gift to that sibling would no doubt spare them a world of interest.

Also, let’s say the third sibling is a shrewd investor with the potential to grow $200,000 today into 10 times that sum in 20 years. It’s hard to put a price on what not getting that money up front will cost.

So the best route to take here? Get everyone in the room — both parents and all siblings. Discuss the concerns and nuances so it’s clear that giving an early $200,000 inheritance carries more consequences than expected. An honest conversation could be the ticket to ensuring that things are done fairly and that there’s no resentment on anyone’s part.

Don’t hesitate to involve outside professionals

The situation above is a tricky one. So is the general topic of inheritances, frankly.

So another thing I’d suggest is to involve the right professionals. That could mean enlisting the help of a financial advisor as well an estate-planning attorney. If an early inheritance is going to be dished out, it’s important that it be accounted for in the overall estate plan.

Another professional to perhaps bring into the mix? A counselor or therapist, especially if there’s a lot of conflict to be dealt with, or if the issue of a shared inheritance is unearthing pent-up issues, like feelings of resentment between siblings.

There’s no shame in needing outside help to resolve financial and emotional matters. And getting the right input could help everyone avoid hurt feelings and poor decision-making.