One of the most common reasons for creating an estate plan is to ensure that estate assets are distributed according to the creator’s wishes. If you are ready to get started on your estate plan, you will need to make a number of decisions related to the distribution of your estate assets. In order to make informed decisions about who to leave your estate assets to and how to effectuate the transfer of those assets, you need to know as much as possible about the available options. To help you make important decisions in your estate plan, the estate planning attorneys at Nash, Nash, Bean & Ford, LLP discuss options for distributing your estate assets.
Almost everyone leaves behind an estate at the time of their death. Your estate includes all assets owned by you at the time of your death, including tangible and intangible assets. Your home, vehicles, bank accounts, and investment accounts are all examples of assets that might be included in your estate. Your entire estate must eventually be distributed to beneficiaries or heirs of your estate. Some of your estate assets will be transferred during the legal process known as probate.
Not all estate assets, however, are required to go through the probate process. Assets that fall into the “non-probate” category bypass the probate process and may be distributed to the intended beneficiaries immediately after your death. Common examples of non-probate assets include:
- Assets held in a trust
- Certain types of jointly held property
- Proceeds of a life insurance policy
- Funds held in an account designated as “payable on death (POD)” or “transfer on death (TOD)”
- Some retirement and pension accounts
Should You Make Equal Gifts?
For a parent or grandparent, one of the most difficult questions to answer when deciding how to distribute an estate is “Should I make equal gifts?” You may feel that you are obligated to treat beneficiaries within the same class equally. In other words, if you have four children, each should receive one-fourth of your estate. The law certainly does not impose such an obligation; however, you may feel compelled to gift equally nonetheless. If, however, you have a beneficiary who has an addiction problem, or is simply not responsible with money, handing him/her a significant inheritance outright might be akin to throwing your money away. Ultimately, only you can decide if making equal gifts is necessary or desirable; however, if you do decide to make equal gifts, consider creating a trust to protect the assets you gift to one, or even all, of your beneficiaries. Using a trust allows your beneficiary to receive the benefit of the trust assets without having direct access to those assets.
General or Specific Bequests?
You will need to decide if you want to gift specific assets to beneficiaries or simply gift a percentage of your estate. On the one hand, making specific gifts is less ambiguous, as your wishes are crystal clear. In addition, leaving specific gifts avoids the need to liquid estate assets, therefore saving your estate the costs involved in selling assets. On the other hand, leaving general gifts (a percentage of the total value of your estate) can create conflict if a beneficiary has a sentimental attachment to a specific asset.
Last Will and Testament or Trust Agreement?
When you think about the method used to distribute your estate assets you likely think of a Last Will and Testament. Many people do use a Will as the foundation of their estate plan and the primary distribution document; however, there is another common option – a trust agreement. If you create a trust and a Pour Over Will, all of your estate assets should ultimately be distributed using the trust agreement. The advantages to using a trust instead of a Will include:
- Probate avoidance
- Your gifts remain private
- You retain a certain degree of control over how the assets are used if you choose.
- Assets can be transferred in and out of the trust relatively easily
- Terms of the trust can also be modified relatively easily.
Contact Estate Planning Attorneys
If you have questions or concerns regarding the distribution of your estate in the State of Illinois, contact the experienced Moline estate planning lawyers at Nash, Nash, Bean & Ford, LLP by calling 309-944-2188 to schedule your appointment today.