Deciding Who Should Inherit Your Wealth When You Die

Bequeathment isn’t always simple. Depending on your life and the things and people you care about, you might be forced to make some hard decisions. Divorces, children from multiple marriages, grandchildren and personal philosophies on charity or generational wealth can pull you in multiple directions.

There are no guides to help you objectively determine who should get your money and assets when you’re gone. It’s a decision every person should have a right to make for themselves.

However, there is one generally accepted best practice when it comes to inheritance – have a legally binding plan.

Probate can be messy, and it may result in your money going to the wrong people or places. Not only do you lose control over how your assets are distributed if you die with no estate plan in place, but your surviving children, siblings, spouse, exes, grandchildren and relatives may get into bitter legal disputes over who should get what. The more detailed instructions you can provide, the easier the estate process will be for your inheritors.

Should You Put Your Assets Into a Trust?

If you speak with a financial planner, they may recommend putting many of your assets into a trust. There are two primary trust categorizations: revocable and irrevocable. Under those two umbrellas are many other different types of trusts, each of which serves a specific purpose. Some trust options include charitable trusts, generation-skipping trusts or special needs trusts for a dependent or family member.

Your trust is always managed by a trustee, whether you’re living or dead. The trustee can be a person or an organization. They are responsible for managing the assets according to your (the trustor’s) wishes. You can be both the trustor and the trustee, and you can name beneficiaries of a trust.

Trustors have wide latitude on the assets they can transfer into a trust. Traditional investments like stocks and bonds, real estate, business ownership stakes and even collectibles can all be put into a trust. When  you pass away, the trust is immediately passed on to beneficiaries or can continue to be managed by co-trustees.

Unlike wills, bequeathing through a trust can prevent your family or beneficiaries from needing to go through the traditional probate process. It can be easier to ensure your wishes are followed as you intend with a carefully designed and properly executed trust.

What’s the Difference Between a Trustee and an Executor?

The trustee is specifically tasked with managing a trust and can be the trustor themselves. An executor is solely in charge of administering a person’s estate after their death. An executor can be named in a person’s will as the individual who will handle the dissolution of their assets and liabilities. 

An executor can also be a co-trustee and/or be put in charge of disbursing assets in a will according to the estate owner’s wishes. You’re able to leave specific instructions on who you want in charge and what you want them to do after your death if you have a well-drafted will and trust documents.

Things to Keep in Mind When Choosing Beneficiaries

• Bequeathing liquid assets to a person might adjust their income significantly, which could negatively impact the benefits they’re currently receiving (Supplemental Security Income, disability, Medicaid, etc.)

• Make sure the beneficiaries on your estate planning documents and the beneficiaries on your various annuities, life insurance policies, retirement savings accounts and other assets are aligned to avoid disputes

• Making a trust your beneficiary might be ideal if your goal is to leave assets to minors, an adult child with questionable judgement or a dependent with a disability

• You may be able to make a trust the beneficiary of a retirement plan for tax purposes, instead of letting it become part of your surviving spouse’s estate

• You can leave specific assets to different beneficiaries in your estate plan, like leaving a specific piece of property to a child from a past marriage or a certain bank account to a grandchild

• Your successor trustee can also be a beneficiary

Can Fullerton Financial Help With My Estate Plan?

We work with estate planning professionals to ensure your retirement planning and investment strategies are optimized for your needs today and in the future. Our goal is to make the dispersal of your assets to beneficiaries as seamless, smooth and unencumbered as possible.

You can find out how we build estate structure into retirement plans by calling us at (623) 974-0300 for an initial meeting.