The Difference Between an Heir and a Beneficiary

October 15, 2024

When it comes to estate planning, it’s essential to understand the difference between an heir and a beneficiary. While these terms are often used interchangeably, they have distinct meanings that can affect who receives your assets after you pass away. According to Nerd Wallet, knowing how heirs and beneficiaries work is key to ensuring that your estate plan reflects your wishes and protects your loved ones.

An heir legally inherits property from a person who dies without a will, a situation called dying intestate. When someone dies intestate, the state’s probate court follows local laws to determine who the heirs are and how the property should be distributed.

The closest relatives are usually given priority. For example, a spouse or children are often the first to inherit, followed by parents and other family members like siblings, nieces and nephews. The specifics depend on your state’s inheritance laws, so it’s always wise to understand how this works in your area.

If you have a will or trust, heirs are not automatically guaranteed to inherit your property, unless they are named beneficiaries.

A beneficiary is a person or entity specifically named in a will, trust, or other legal document to inherit assets. Unlike heirs, beneficiaries can include family members, friends, charitable organizations or even pets.

Beneficiaries are designated through estate planning tools such as wills, trusts, or life insurance policies. You can name specific people to receive certain assets and include instructions on what should happen if one of your beneficiaries cannot inherit. This flexibility allows you to customize your estate plan according to your specific wishes.

If you pass away without a will, the court will decide who your heirs are based on state law. On the other hand, if you have a will or trust, you get to choose your beneficiaries. Doing this prevents you from leaving the decision to the court, ensuring that your assets are distributed the way you want.

For example, if you want your spouse to inherit most of your assets but also wish to leave a portion to a close friend or charity, you can name them as beneficiaries in your estate plan. This way, you control who inherits your estate instead of relying on default state laws.

If you don’t have a will or don’t name beneficiaries on key assets, such as life insurance policies or retirement accounts, your loved ones may have to go through the probate court process. The court will use intestacy laws to determine your heirs and distribute your assets, which might not align with your wishes.

In some cases, if no heirs can be found or named, your estate could go to the state through a process called escheat. This situation can leave your family without the inheritance you intended for them. Create a clear, legally binding estate plan that outlines who your beneficiaries are to avoid these outcomes.

Naming beneficiaries in your estate plan is straightforward but requires careful thought and organization. Here’s how you can start:

Take inventory of your assets – Make a list of everything you own, including property, investments and sentimental items.
Decide who will benefit from your estate – Consider who would benefit the most from your assets. You can choose close family members, friends, or even charitable organizations.
Name beneficiaries in a will or trust – Work with an estate planning attorney or use an online service to create a will or trust that clearly outlines your beneficiaries.
Update your beneficiary designations—Name beneficiaries directly on assets like life insurance policies or retirement accounts. This ensures that the assets pass directly to them, avoiding probate.

By understanding the difference between an heir and a beneficiary, you can use estate law to control the legacy you leave behind. If you would like to learn more about heirs and beneficiaries, please visit our previous posts.

Reference: NerdWallet (Nov. 13, 2023) “What Is an Heir? Meaning and Types”

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Important Steps to take After the Passing of a Spouse

October 9, 2024

The passing of a spouse is one of life’s most stressful events, topping the list of most mental health checklists for anxiety-creating experiences. There are important steps to take after the passing of a spouse. It’s important to build in answers to “what if’s” into an estate plan, advises a recent article from The Penny Hoarder, “How to Change Your Estate Plan After Your Spouse Dies.”

It’s easy to procrastinate estate planning. However, even if you have a will, as 1.3 million Americans do, you’re not finished. Regular updates of your estate plan to reflect new circumstances are necessary, especially upon the death of a spouse. It’s complicated to do this when grief is fresh. However, it becomes manageable by taking this task one step at a time.

Married couples typically create their estate plans together, with the understanding of one spouse outliving the other. Being realistic about who is likely to die first sounds a bit morbid. However, it should be taken into consideration. Males tend to have shorter lifespans, while people who live with chronic conditions, like diabetes, heart disease, or cancer, should keep the impact of their conditions in mind when making plans for the distant or not-so-distant future.

Powers of Attorney should be updated every few years. This is the person chosen to handle financial and legal affairs in case of incapacity. In most cases, this is assigned to a spouse, so it should be updated soon after the spouse passes. The power of attorney does not have to be an adult child but should be trusted, organized, and financially savvy.

Another document to be updated is the Healthcare Proxy, sometimes called a Medical Power of Attorney. An adult child living nearby, a trusted friend, or another relative needs to be named and the document executed in case you should become incapacitated. This way, someone can act on your behalf without going to court to obtain guardianship.

Wills and trusts need to be updated. With your spouse’s passing, your estate may now be vulnerable to estate taxes on the state and federal levels. Who do you want to inherit your property from, and what’s the best way to pass assets on to the next generation? An experienced estate planning attorney will be needed to make this happen most efficiently and expeditiously.

After a spouse passes, you’ll also want to review beneficiaries on life insurance, retirement accounts and any accounts with a named beneficiary. If these documents have contingency beneficiaries who receive the assets, you’ll be in good shape if the primary beneficiary has died. However, do you know for sure the accounts are structured this way? Reviewing all these accounts is surely a good idea.

It may be time for the estate to include a trust. The most significant change occurring when a spouse dies is the surviving spouse is now legally considered single. All states have laws about how much assets may be owned to qualify for Medicaid. This number is dramatically lower for a single person than for a married couple. The surviving spouse may need to put their assets into a trust to exempt some assets that would otherwise need to be spent down before qualifying for Medicaid.

This is also the time to review end-of-life documents, including a Living Will and other medical directives.

There’s no way to make the loss of a spouse easy. However, these important steps to take after the passing of a spouse will provide some peace of mind. If you would like to learn more about planning for surviving spouses, please visit our previous posts.

Reference: The Penny Hoarder (Sep. 5, 2024) “How to Change Your Estate Plan After Your Spouse Dies”

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Safeguarding Wealth is an Essential Strategy for Senior Women

September 30, 2024

Women are living longer and facing unique financial challenges. With life expectancy for women being higher than men, senior women need their retirement savings to stretch further. According to JP Morgan, they often find themselves with less saved due to career breaks for caregiving and the persistent gender pay gap. Safeguarding wealth is an essential strategy for senior women to ensure financial security in their later years.

Retirement planning for women should consider their longer life expectancy and potential career interruptions. A well-crafted financial plan, designed with the help of knowledgeable advisors, can help address these concerns.

Women should actively participate in creating a plan that aligns with their lifestyle needs and future goals, factoring in anticipated and unplanned career breaks. It is also essential to regularly assess savings and investments to ensure that they are on track for a comfortable retirement.

Many women find themselves in the role of caregiver for aging parents. This responsibility often comes with both emotional and financial burdens. Women are more likely than men to leave their jobs to take care of aging parents, impacting their own retirement savings.

Beyond financial concerns, women should also consider the time and energy required for caregiving. Planning with family discussions about responsibilities can help ensure that these roles are agreed upon and manageable.

The American College of Trust and Estate Counsel Foundation highlighted the importance of women’s estate planning with the story of Huguette Clark, a wealthy woman who became isolated in her later years. Despite her wealth, Clark spent the last 20 years of her life alone in a hospital room, away from her multiple luxurious homes. She was fearful that everyone was after her money and chose to remain secluded.

Clark’s relatives challenged her will, claiming she was not of a sound mind when it was created. The case was settled. However, it illustrates how vital it is for senior women to protect their wealth and ensure that their wishes are respected.

Women should actively engage in estate planning to protect their wealth and ensure their financial security. This includes creating a will, setting up trusts and naming trusted individuals to manage their estate in case of incapacity. Understanding and participating in these decisions are crucial for senior women to prevent potential disputes and ensure that their assets are distributed according to their wishes.

Estate administration is another critical aspect of wealth planning for women. When a loved one passes, the burden of administering their estate often falls on women. This role includes locating assets, paying off debts and distributing inheritances, which can be a complex and time-consuming process. By planning ahead and discussing estate administration with family members, women can ensure that they are prepared to take on this role or appoint someone else who is better suited.

Safeguarding wealth is an essential strategy for senior women. If you are looking to secure their financial future, assembling a team of trusted advisors is a crucial first step. This team should include a financial advisor, an estate planning attorney and a tax professional who understand women’s unique challenges.

These advisors can help develop a comprehensive plan that aligns with a woman’s financial goals, family responsibilities and long-term needs. Regular communication with this team ensures that the plan adapts to changing circumstances, providing peace of mind and financial security. If you would like to learn more about planning for women, please visit our previous posts.

References: J.P. Morgan (Mar. 20, 2024) “Wealth Planning Is a Women’s Issue” and The American College of Trust and Estate Counsel (ACTEC) Foundation (Mar. 20, 2024) “Balancing Independence and Vulnerability of Older Adults: What if Granny Wants to Gamble?”

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Estate Planning Essentials for LGBTQIA+ Couples

September 25, 2024

Estate planning essentials are crucial for everyone, but can be especially vital for LGBTQIA+ couples. Even though marriage equality laws have leveled the playing field in many ways, there are still unique challenges and opportunities that LGBTQIA+ couples should consider. Creating and updating your estate plan to reflect your changing life situation is key to protecting your assets and loved ones.

Like any other couple, LGBTQIA+ couples must have certain essential documents in place to protect their rights and wishes. These include:

Living Will: Outlines your wishes for end-of-life care if you cannot communicate them yourself.
Health Care Power of Attorney: Designates someone to make medical decisions on your behalf if you’re incapacitated.
Durable Financial Power of Attorney: Allows someone to manage your financial affairs if you cannot.
HIPAA Privacy Authorization: Ensures that your designated person can access your health information when necessary.

These documents are critical for ensuring that your wishes are respected, especially when one partner might not be recognized as a legal spouse due to outdated or incorrect paperwork.

One of the unique challenges for LGBTQIA+ couples, particularly those with children, is the legal recognition of both parents. In many cases, only one partner is the biological parent, which can create complications if the biological parent passes away or if the couple separates.

By adopting their partner’s child, non-biological parents can establish a legal relationship with the child and obtain parental rights. This can prevent disputes over custody with extended family members and protect the child’s inheritance rights.

LGBTQIA+ individuals must ensure that the beneficiary forms for their insurance plans, retirement accounts and other financial assets are current. These forms override what is written in a will. Therefore, if you forget to replace an ex-partner or family member as a beneficiary, that person will inherit those assets.

This is especially important for LGBTQIA+ couples who may have previously named someone other than their spouse as a beneficiary before their marriage was legally recognized. Regularly reviewing and updating these forms, especially after major life events, ensures that your assets go to the person you intend.

Before same-sex marriage became legal, many LGBTQIA+ individuals entered into domestic partnerships, civil unions, or other legal arrangements to protect their relationships. However, some states automatically upgraded these partnerships to marriages when the law changed, sometimes without the couple’s knowledge.

This can create a “tangled web” of legal relationships that could lead to complications with your estate. For instance, if you didn’t formally dissolve a previous partnership, your former partner might have a claim to your estate. It’s important to resolve any past legal unions to prevent future disputes.

In a story shared in the MassMutual blog, Joan Burda, an attorney in Lakewood, Ohio, shares the cautionary tale of LGBTQIA+ couples who entered domestic partnerships or civil unions before legalizing same-sex marriage. These partnerships were sometimes automatically upgraded to marriages without the couple’s knowledge when laws changed, leading to unexpected complications.

For instance, couples who thought they had dissolved their previous legal relationships might find that their former partners still have legal claims on their estate. This underscores the importance of reviewing and resolving all prior legal unions to prevent future disputes and ensure the full protection of their current relationships.

Estate planning is not a one-time event. Laws change, relationships evolve and your plan needs to reflect those changes. LGBTQIA+ couples should take time for a review of their estate planning essentials, resolve any past legal relationships and ensure that their beneficiary forms are up to date.

Your relationship and family deserve the strongest legal protections available. Don’t leave your future to chance—ensure that your estate plan reflects the unique needs of LGBTQIA+ couples. If you would like to learn more about planning topics for same sex couples, please visit our previous posts.

Reference: MassMutual (June 06, 2024) “Estate Planning for LGBTQIA+ Couples”

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Preparing Your Adult Children for Their Inheritance

September 18, 2024

Talking about inheritance with your children is one of the most important conversations you can have. However, it’s never easy. This is a conversation about what happens after you’re gone. Preparing your adult children for their inheritance can prevent many problems down the road.

Avoiding the topic of inheritance might seem like the path of least resistance. That is true at first. However, after you’re gone, your loved ones might suffer confusion, misunderstandings and family conflicts due to a lack of communication. Not discussing your plans could pose unanswered questions to your children or, worse, unexpected financial burdens.

According to Fidelity, open communication helps your children avoid surprises and prepares them emotionally and financially. Discussing your estate plans with your adult children can smooth the transition of wealth by sharing the values and intentions behind your decisions.

Starting the conversation about inheritance can be awkward. However, it doesn’t have to be. Begin by setting clear expectations. Let your children know why you’re discussing this and what you hope to achieve. Focusing on the importance of family unity and ensuring that everyone is on the same page is helpful.

You can start with simple topics, like how you manage your finances or the basics of your estate plan. As the conversation progresses, more details will be introduced, such as how assets will be distributed and the reasons behind these decisions.

Financial education plays a significant role in preparing your children for their inheritance. If your children lack basic money management skills, they may struggle to manage the wealth they inherit.

Start teaching them early by encouraging good financial habits. For example, you can help them set up a budget, open a savings account, or understand the importance of credit. As they age, consider discussing more complex topics, such as investing, taxes and the importance of maintaining a financial cushion.

Many parents worry about how their children will manage a large inheritance. If this concerns you, establishing a trust can effectively protect your assets, while still providing for your children’s needs.

Trusts can be tailored to fit your family’s unique situation. For example, you might set up a generation-skipping trust to benefit your grandchildren or a spendthrift trust to prevent a beneficiary from mismanaging their inheritance. Trusts can also help minimize taxes and protect your assets from creditors.

Even with the best preparation, the wealth transition can still be challenging. One of the best ways to ensure a smooth process is by developing a comprehensive estate plan built on clear communication and understanding. Ensure that your children know where essential documents are stored and who to contact when the time comes. Consider creating a family mission statement to outline your values and provide guiding principles for your children.

Preparing your adult children for their inheritance is about more than just transferring money. It’s about passing on your values and ensuring that they’re ready to handle the responsibilities that come with it. If you would like to learn more about managing an inheritance, please visit our previous posts.

Reference: Fidelity (Jul. 26, 2024) “Preparing your children for their inheritance”

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Understanding Primary and Contingent Beneficiaries is essential for Estate Planning

September 3, 2024

Creating an estate plan is the most important way to ensure that your wishes will go into effect after you pass away. During estate planning, you’ll have to designate beneficiaries. Understanding the difference between primary and contingent beneficiaries is essential for estate planning. Knowing this distinction can make your estate plan more comprehensive and effective, giving you peace of mind that your loved ones will be okay when you’re gone.

A primary beneficiary is the person or entity you choose to receive your assets first when you pass away. This could be a spouse, a child, a friend, or even a charity. When you set up a will, trust, or other financial accounts, like life insurance or retirement, you’ll be asked to name one or more primary beneficiaries.

You might name your spouse as the primary beneficiary if you have a life insurance policy. If you pass away, your spouse will receive the payout directly.

Choosing a primary beneficiary ensures that your assets go to the person or organization you want them to benefit. It can also help avoid conflicts among family members and ensure a smooth transfer of assets. You minimize the chances of disputes and legal challenges by clearly designating who should receive your assets.

Life is unpredictable, and there might be situations where your primary beneficiary cannot receive your assets. They might predecease you, be unable to be located, or simply refuse the inheritance. This is where a contingent beneficiary comes into play.

A contingent beneficiary, or secondary beneficiary, is essentially a backup beneficiary. The contingent beneficiary is next in line if the primary beneficiary cannot receive the assets. For instance, if your spouse is the primary beneficiary and they pass away before you, your contingent beneficiary will receive the assets instead.

According to ElderLawAnswers, naming a contingent beneficiary is essential in estate planning. A contingent beneficiary is designated to receive your assets if your primary beneficiary cannot do so.

This additional layer of planning provides security and peace of mind, guaranteeing that your assets are passed on as you intended, regardless of any unexpected events involving your primary beneficiary. Your wishes will remain clear even in unforeseen circumstances, and your estate plan will carry them out.

Yes, you can designate multiple primary and contingent beneficiaries. This is particularly useful if you have a large estate or multiple heirs. For example, you might want to divide your estate equally among your children. In this case, you can name all your children as primary beneficiaries, each receiving a specified percentage of your assets.

When you have multiple primary beneficiaries, your assets are divided according to the percentages you specify. If one of the primary beneficiaries cannot receive their share, their portion can be reallocated to the remaining primary beneficiaries or passed on to the contingent beneficiaries.

You can similarly have multiple contingent beneficiaries. For example, you might name your spouse as the primary beneficiary and your two children as contingent beneficiaries. If your spouse cannot receive the assets, your children would then receive the assets consistent with your instructions.

While beneficiaries are individuals you choose to receive your assets, heirs-at-law are entitled to inherit from you under state law if you don’t have a will. Without an estate plan, state intestacy laws will distribute your assets. This usually goes to your closest relatives, such as your spouse and children. Designating primary and contingent beneficiaries allows you to control who receives your assets rather than leaving it to state law.

Life circumstances change, and so should your estate plan. Major life events such as marriage, divorce, the birth of a child, or the death of a beneficiary may require updates to your beneficiaries. Regularly reviewing and updating your estate plan ensures that it remains aligned with your current wishes and life situation.

Understanding the roles of primary and contingent beneficiaries is essential for robust estate planning. It ensures that your assets are distributed according to your wishes, even in unexpected circumstances.

An experienced estate planning attorney can help you designate beneficiaries, create a comprehensive estate plan and provide peace of mind for you and your loved ones. If you would like to learn more about beneficiaries and their role in estate planning, please visit our previous posts.

Reference: ElderLawAnswers (May 20, 2024) “What Is a Contingent Beneficiary?”

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Ensure your Child’s Future is Protected with Estate Planning

August 26, 2024

Becoming a parent is an exciting journey filled with dreams and plans for the future. Amidst the joy and anticipation, you also need to consider your child’s future security. While no one wants to think of it, the worst could happen to you, and you could become unable to care for your child. Without an estate plan, your assets could go through a lengthy probate process, and the court would decide on guardianship for your children. Ensure your child’s future is protected with estate planning.

Estate planning involves organizing your financial affairs to ensure that your assets are managed and distributed according to your wishes after you pass away. It includes creating a will, assigning power of attorney and considering trusts. According to Experian, planning ahead can avoid potential legal complications and ensure that your loved ones are taken care of. Estate planning can also help minimize taxes and protect your assets from creditors.

Without a will, state laws determine the distribution of your assets and the guardianship of your children. This could mean that your child ends up with a relative you haven’t spoken to in years or foster care. An estate plan allows you to choose guardians and ensure that your child’s future is secure.

A will is the foundation of your estate plan. It should:

Name a guardian for your children.
Name an executor to manage your estate.
Specify who inherits your assets.

Power of attorney allows someone to make financial and health care decisions on your behalf, if you become incapacitated. This includes:

Financial Power of Attorney: Give someone the power to manage your finances and property.
Health Care Power of Attorney: Empower someone you trust to make medical decisions for you.

The best time to start estate planning is now. Waiting until your baby arrives can lead to delays and potential financial hardships. Building an emergency fund, contributing to a health savings account and setting up automatic savings transfers are great first steps. Proactively managing your finances can help reduce stress and ensure a smoother transition into parenthood. Starting early also allows you to make informed decisions and adjust your plan.

When Joyce Marter, a financial therapist and author, was expecting her first daughter, she found herself living paycheck to paycheck with substantial student loans. In an article by the NY Post, she reflects and explains how she realized the immense value of having a solid financial plan before transitioning into parenthood. Marter recalls a conversation with her pregnant supervisor, who advised her that no one is ever truly ready for a baby: “None of us are really ever truly ready — you just take the plunge and figure it out as you go.”

Years later, as Marter prepared for her own child, she understood the importance of proactive financial planning. She began by building an emergency fund, contributing to a health savings account and avoiding unnecessary baby registry items. These steps provided a financial safety net and helped reduce stress during her pregnancy.

Don’t wait until it’s too late. Ensure that your child’s future is protected and your wishes are honored with proper estate planning. If you would like to learn more about planning for minor children, please visit our previous posts.

References: NY Post (Oct. 18, 2023) “Savvy expecting parents need to start financial planning now” and Experian (Oct. 13, 2020) “How to Plan Your Estate as a New Parent – Experian”

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Addressing your Estate Planning during Divorce is Critical

July 31, 2024

When estate planning dovetails with divorce, existing plans need to be redesigned. How much depends on the nature of the divorce, as explained by a recent article from Accounting Today, “Estate planning for divorcing couples.” Spousal rights, beneficiary designations, child custody and property distribution all need to be examined, as well as the distribution of property in the estate plan. Addressing your estate planning during a divorce is critical.

If this is your situation, you’ll need a team of professionals who can work well together. Your estate planning attorney, accountant and divorce attorney will need to be in frequent contact, as so many of these areas overlap. You’ll want to ensure that your separation agreement and estate plan complement each other. Anticipating potential challenges and obstacles in advance is crucial.

Here are a few aspects to consider:

If your estate planning attorney worked with you and the person you are divorcing, they will want to be clear about who they represent for the new estate plan. If it’s an amenable divorce, the estate planning attorney may recommend a respected colleague to help the other spouse.

The same scenario must be considered for the accountant. Did they interface with one spouse more than the other? If a joint return was filed in the past, which spouse would they work with during the divorce and afterward? An accountant’s involvement in an estate plan during the divorce process may be critical to ensuring that there are no discrepancies in the financials.

Beneficiary designations need to be revisited since, in most cases, spouses name each other as beneficiaries. Updating the beneficiary designation will avoid further complications in distributing the assets if something occurs to one of the spouses while the divorce is in process. Beneficiaries only change when the owner of the account actively makes the change. Your soon-to-be-ex may inherit everything if you don’t change the account beneficiary.

Estate planning involves guardianship for minor children, and divorce typically addresses child custody, support and inheritance. If one of the parents dies, who would get custody of the children? How will they be supported? Life insurance may be part of the separation agreement, where the ex-spouse will still be the beneficiary, so funds may be used to support the minor children.

Couples in the process of divorcing may not create new trusts until the divorce proceedings have been finalized. However, suppose trusts were established as part of estate planning before the divorce. In that case, they may be considered marital or separate property, depending on the source of the assets in the trust. This is a conversation to have with your estate planning attorney.

Addressing your estate planning during a divorce is critical. With the guidance of an experienced estate planning attorney, accountant and divorce attorney, it is possible to move through the tumult and begin the next chapter with some peace of mind. If you would like to learn more about planning during or after a divorce, please visit our previous posts.

Reference: Accounting Today (July 5, 2024) “Estate planning for divorcing couples”

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Sometimes, a Professional Trustee is a Good Idea

July 18, 2024

A couple in their 70s are trying to complete their estate plan but can’t determine who should be their trustee or executor. It’s a second marriage for both. They each have an adult child, but neither child can serve. There are no other living relatives, and all their friends are also in their 70s. Sometimes, a professional trustee is a good idea. A professional trustee or company can provide administrative services for the trust without the potential headache with family members.

The couple gets kudos for tackling this complex issue, according to the article “We’re in our 70s and don’t trust our family to handle our estate. What can we do?” from Market Watch. Most people give up at this point and then run into problems in the future, either because of incapacity or because the death of the first spouse leaves the surviving spouse in a difficult situation.

The first place to start is conversing with your estate planning attorney. They will likely know of a professional trustee or company providing “estate administration services.” It may be possible that they offer this service in their own office, too.

If this isn’t satisfactory, speak with a major financial institution, which will likely be insured and subject to state and federal regulations. They may handle your financial and personal information, such as distributing assets, closing down accounts, handling digital assets and filing income and estate tax returns.

Consider the window of time. You’ll want to be sure the person or bank will still be operating in ten to twenty years. You’ll also want to be sure they are a fiduciary. This means they are legally bound to put your interests above their own, which a court can enforce.

The fees will depend upon the size of your assets and the entity you choose. A large bank will usually charge a certain percentage of your assets. Some use a sliding scale, like 5% on the first $100,000 and a lower percentage as the asset level rises. A $1 million estate could cost around $30,000 to administer.

If a professional trustee is the same person who is administering your trusts, there will be additional fees. The assets in the trust will need to be managed, including investing, making distributions and paying taxes. Many professional trustees handle special needs trusts, where parents have left money for disabled adult children, and administer trusts for family members.

Sometimes, a professional trustee is a good idea, even when family members are available. Naming a professional, whether an institution or an individual, can alleviate concerns about family dynamics interfering with your wishes. If you would like to learn more about being an executor, or trustee, please visit our previous posts.

Reference: Market Watch (June 15, 2024) “We’re in our 70s and don’t trust our family to handle our estate. What can we do?”

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Should You Tell Beneficiaries Their Inheritance?

July 16, 2024

Should you tell beneficiaries their inheritance? It is a legitimate question for many families. If you’ve watched Netflix’s The Gentlemen or HBO’s Succession, you know how powerful the inheritance storyline can be. The mystery creates suspense, and the reveal invites drama. However, your estate plan shouldn’t take lessons from these plot lines, says an article from mondaq, “Communicating Your Estate Plan: A Helpful Tool, Not A Fix-All.”

Whether to reveal the details of your estate plan should be preceded by another question: will being upfront with heirs and beneficiaries before you die reduce the likelihood of family fights and litigation, or will it create the conflict you were hoping to avoid?

While it’s best to be able to share your wishes, whether or not to communicate anything about your estate plan is entirely up to you. No one should feel they must share this information. Your estate planning attorney is ethically required to keep your discussions and any details confidential, even after you have passed.

Any person can modify their estate plan at any time, as long as they are competent and living. You can make any changes you want, even if you’ve told your beneficiaries one thing and then decide to do another. This may have negative consequences. However, you are legally allowed to do it.

Communication can take any form and be vague or specific. You could disclose the existence of an estate plan and inform heirs that it was carefully created based on your wishes and the advice of an estate planning attorney and any other tax and wealth advisers.

Sometimes, knowing a plan has been made with professional help can allay concerns from heirs. You might communicate the general framework of the estate plan, letting heirs understand who has been named for roles like Power of Attorney, Health Care Power of Attorney, Successor Trustee and Executor. It may be helpful to explain why you’ve made these decisions to avoid the “Mom would have never wanted this” arguments.

Things don’t always go as planned, however. If explanations are not consistent among heirs, there will be conflict. Even if explanations are consistent, there will be conflict in some families, no matter how clear you are with everyone.

In some cases, having your estate planning attorney convey details of your choosing to family members might be helpful. Learning this information from someone outside the family can be less triggering, particularly when the family respects the attorney as a skilled professional.

Should you tell beneficiaries their inheritance? Unfortunately, there are some families where transparency won’t preclude conflict. In these situations, sharing any details may create battles you may not want to be a part of or subject you to attempts to influence your decisions. This is something that each person has to consider. A frank conversation with your estate planning attorney about handling these issues will help you decide if or how much information to share with your family. If you would like to learn more about inheritance planning, please visit our previous posts.

Reference: mondaq (June 18, 2024) “Communicating Your Estate Plan: A Helpful Tool, Not A Fix-All”

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Category: Beneficiaries

The Difference Between an Heir and a Beneficiary

Important Steps to take After the Passing of a Spouse

Safeguarding Wealth is an Essential Strategy for Senior Women

Estate Planning Essentials for LGBTQIA+ Couples

Preparing Your Adult Children for Their Inheritance

Understanding Primary and Contingent Beneficiaries is essential for Estate Planning

Ensure your Child’s Future is Protected with Estate Planning

Addressing your Estate Planning during Divorce is Critical

Sometimes, a Professional Trustee is a Good Idea

Should You Tell Beneficiaries Their Inheritance?

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