Some people fantasize about receiving an inheritance like it will be a dream come true. But when it comes to giving an inheritance and deciding who should receive what, the process can be a lot less thrilling.
Setting up wills and trust funds isn’t a process that can happen overnight. You will need to consider who could benefit most from certain assets and the best way to bestow those items.
Leaving an inheritance to your loved ones
Families and cultures have varying expectations when it comes to inheritance. No matter your family situation, it is crucial to discuss various scenarios with your loved ones. Clearly communicate your plans and intentions. Having well-prepared wills, estates, and trusts is an integral pillar of your financial planning, but do not neglect the often-overlooked communication and heir preparation.
If parents diverge from equally splitting an inheritance among their children, it can have severe consequences for the siblings. If siblings already have different income levels and deal with tensions that can arise from that disparity, an uneven inheritance amount can exacerbate those relational issues.
Some parents opt for a compensatory adjustment if one sibling needs it. If you are concerned with maintaining healthy relationships or preventing future fallouts, that is something that you should discuss with your family ahead of time.
Equally dividing the inheritance among siblings has been the norm for many years. However, the rise in blended families, second marriages, and half-siblings leads to many unique circumstances where an even split isn’t so easy.
Regardless of how you decide to divide the inheritance, your children and heirs need to understand that they are your legacy – not your money and possessions. To maximize your legacy, work with your children to contribute something to the community for the benefit of others – regardless of the dollar amount you’ll be leaving behind.
Legally Donating Wealth to a Charity
Perhaps you’ve decided to donate a portion of your wealth to a charity but are concerned about your children or other relatives contesting the wills, estates, and trusts. You will need to utilize the services of an estate planning lawyer.
Children and spouses can (and do) try to challenge the wills or trusts when the estate owner wants to give to a charitable organization after their death. This tends to happen if the children believe that they are not receiving the amount they should be based on the estate assets.
A professional trustee is a professional, impartial fiduciary who will act in the best interests of the trust and its beneficiaries. This is key, as you will be able to avoid the administrative burdens and litigation risk from unhappy beneficiaries. This can help ease the possibility of any family disharmony.
Baltimore-Washington Financial Advisors works with highly successful wealth creators like you to ensure that your giving is carried to fruition in the way you planned and desired.
Protecting Your Estate Plan from Lawsuits
When it comes to setting up wills, trusts, and estate plans, an unfortunate reality is that they often need to be protected from heirs. Family members often fight over the estate plans due to jealousy, greed, sibling rivalries, or any number of messy scenarios.
If you are concerned that family members will attempt to sue your estate to obtain additional wealth, Baltimore-Washington Financial Advisors are equipped to work with you to create an estate plan that will not end up in court.
One option is to create a trust in addition to a will. While a will is generally required to undergo the court process of probate after your death, a trust does not need to. If you establish and properly fund a trust, you will reduce the likelihood that one of your family members will take the estate plan to court.
Another preventative measure is to include a “no contest” clause within the legal documents for your wills and trusts. Clauses like this can be an effective way to discourage family members from pursuing lawsuits. The no contest clause, also known as an in terrorem clause, is a specific provision in a will or trust expressing that if any beneficiary contests the validity of the will or trust, they will forfeit their interest in the estate.
Planning for your Future
While there are various ways to lower the risk of heirs fighting over your estate, your decision must be considered within the broader context of your estate plan.
Wherever you are in the process of setting up wills and trusts, Baltimore-Washington Financial Advisors in Columbia, MD is here to provide ongoing professional guidance that will help you achieve your financial goals. At BWFA, we always tailor our approach to each person and family with transparency, objectivity, and thoughtfulness.