Legal Law

Selection of a beneficiary: who, what, when

Now that you have decided which estate planning instrument (a will or a trust) to use and have selected your trustee or personal representative, who do you want to leave your property to? What property do you want to leave to each beneficiary? When should each beneficiary receive their property? The answers to these questions may seem easy: leave everything to your children in equal parts and let them figure out the details. However, these questions require more detailed analysis to ensure that your property passes to who you want it to pass, when you want it to pass, and on the terms you want it to pass to each beneficiary.

  • Who receives your property?

Initially, this question is easy to answer: my children will receive all my properties. That is easy. But what if one of your children dies before you? Does that child have children? What about the spouse of that child? Do you want the spouse to receive something?

What happens if after executing your will or trust, one of your children becomes disabled and receives government benefits? Do you want that child to receive his share of your estate directly, thus disqualifying him for government benefits?

Do you want to remove one of your children from your will or trust? Would it be more advisable to leave something to that girl but restrict her access to what you leave her?

A will or trust can be drafted to include answers to these questions, but the answers require the client to provide a thoughtful opinion.

Instead of asking who you would like to receive your property, I sometimes ask you who you do not want to receive your property. If you don’t want your son-in-law to put his slippery fingers in your inheritance to waste his gambling habits, you will probably have to put your daughter’s portion of your estate into some kind of sub-trust. for the benefit of her and her grandchildren.

  • What property does each beneficiary receive?

A common probate dispute involves which beneficiary gets what. This is not always just a fight over worthless trinkets (although it is very common), it can also be a fight over numerous parcels of real estate. A recent dispute we handled involved an estate consisting of the deceased’s home and a couple of commercial real estate parcels. The will as long as all the children receive equal parts of the estate.

All the children did not get along and the idea of ​​these children owning property together seemed impossible. A fight broke out over the distribution of the property. A girl did not want to do business with her siblings or be a co-owner of numerous properties.

The deceased had a simple will in a situation where she needed something more complex to identify the specific property that each child should have received or to distribute the properties to a trust to be administered by a professional trustee. Specific language about who would get what specific property, or what would happen to all of the property if the children disagreed with the distribution, would possibly have saved all substantial attorneys’ fees.

  • When does the beneficiary receive the property?

The timing of a distribution can be extremely important. Do you want a beneficiary to receive the beneficiary’s share of your estate immediately after their death, or years later if they ever do so? Many beneficiaries benefit by leaving their inheritance in a trust for their entire life.

If a beneficiary is disabled, they will most likely want to leave that beneficiary’s portion of their estate in a supplemental needs trust (sometimes called a special needs trust) in which the beneficiary never receives their inheritance. Rather, it is held in trust for life.

If you have younger children, chances are you don’t want them to receive their share of your estate until they reach a certain age, such as 25, 30, 35, or 40. However, without proper planning, Oregon says that once a If a child turns 18, they can receive their share of your estate once they turn 18 (except in limited circumstances). Most people do not like this outcome and include a trust for minor children in their will or trust to prevent this from occurring. When using a children’s trust, a trustee (whom you designate in your will or trust) will manage the trust assets for the benefit of the child and may use the trust assets to pay for health care, education, housing, etc. . of his son. When the child reaches the indicated age, he will receive the remaining assets.

Also, you may want to leave something to a beneficiary who is having trouble spending, gambling, or drinking heavily, but you don’t want that individual beneficiary to have control of the property that you leave. You can use a trust established during the life of the beneficiary in which the trustee of the trust has absolute discretion over the distribution of the trust assets. Using a trust saves you from having to disinherit a troubled child, but it also allows you some level of control over how you use your property after your death.

You can also have a child who is a doctor, lawyer, or in another profession where possible claims of negligence or negligence could wipe out that child’s estate. By leaving that child’s portion of your estate in a trust for the child and your family’s benefit (with an independent trustee), you may be able to prevent your creditors from receiving your inheritance.

  • Conclution

Like making the decision to use a will or trust and whom to name as your trustee or personal representative, choosing your beneficiaries is a well thought out answer. There is no single answer and what works for one client may not work for the next as families are unique.

© 02/20/2014 Kevin J. Tillson of Hunt & Associates, PC All rights reserved.

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