When (& How) to Leave Assets to Your Heirs

When it comes to estate planning, three big questions that must be answered are:

  1. Who gets my assets when I pass?
  2. How much do they get?
  3. When & how do they receive it?

Most people have a pretty good idea of what they want for “who” and “how much.”  But, deciding “when & how” can be a bit tricky.  Luckily, the same options for this are available whether you decide to do your planning with a will or with a revocable living trust.  Those three basic options are:

Option 1: Leaving it Outright

Just like it sounds, this option is simple and straight to the point.  The assets are given to the person(s) or organization(s) you’ve designated all at once, with no strings attached.  This tends to work best for leaving assets to charities or to responsible, older adult children who have already thought through their own estate plans and do not wish for their inheritance to be protected by a trust.

Believe it or not… there are many reasons your children may actually *want* to have their inheritance left to them “in trust.”

Option 2: Over Time, Through Installments

Another option is to leave assets to your beneficiaries a little (or a lot) at a time.  An example would be leaving a certain amount or percent at age 30, 35, 40, etc.  This gives beneficiaries an initial gift at an early stage and, if they make mistakes the first time around, time to learn from their experiences and make better financial decisions as time goes on.  In this example, the assets are held in trust while “waiting” to be given out when the beneficiary reaches the next specified age.

Option 3: With Discretion and Protected by Trust

This option offers the most ability to specify what the assets are to be used for and also offers the most protection to the beneficiary.  When serving as trustee, we often see trusts where assets may be given out to the beneficiary for general health, education, maintenance and support needs (i.e. almost any reasonable expense of living) or are sometimes restricted to only include or not include certain things.  By leaving assets to a beneficiary in trust, you are able to protect those assets in ways that the beneficiary is unable to do themselves.  For example, as long as the assets are in trust, they cannot not be claimed by creditors, split up during a divorce or required to be spent down to qualify for Medicaid benefits.  These are just a few examples of the powerful protections of an ongoing trust.

If you’re deciding how to leave assets to your children, ask them if they would like to have their inheritance left to them in trust.  You just may be surprised by the answer!

I look forward to hearing from you!

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