Kaplin Stewart

Choosing beneficiaries is a key component of estate planning

For most Pennsylvania residents, the primary focus of estate planning is to facilitate the smooth transfer of assets from one generation to the next. Most people want to ensure that the wealth they have worked to accumulate will go to the desired heirs. Selecting those individuals, however, can be a more difficult task than many imagine when they first sit down to address their estate planning needs.

Most people have a list of loved ones that they would like to include in their estate plans. However, the manner in which that wealth should be divided poses something of a challenge for many. Should all heirs be treated equally or should wealth be distributed according to need? These are just some of the questions that must be answered in the early stages of planning an estate.

Some families try to take a simplified approach and leave their wealth to their children in equal shares. This tactic fails, however, to consider that various assets have different types of value and are not easily divided. Real estate, for example, is an asset that can be expected to continue to gain value over time. It is not easily liquidated, and it also requires an investment in order to maintain its value. Therefore, an heir who inherits a home valued at $200,000 and a sibling who inherits a trust that contains the same amount are not inheriting assets that are truly “equal.”

Other families decide to pass down their wealth according to need. Loved ones who are perceived as having a greater level of need are given a greater share of wealth. This approach can lead to extreme contention between siblings, however, as those who have achieved higher degrees of success may feel that they are being punished for those accomplishments. When this approach is taken, it is important that the parents discuss their plans, and the reasoning behind those decisions, with all involved. That can help reduce tension when the time comes to actually divide wealth between the family members.

Determining beneficiaries is a challenge to many in Pennsylvania. These and other estate planning matters are best handled under the advice of a trusted attorney. Having a professional resource to rely upon can make it far easier to make estate planning decisions, including how to select beneficiaries and determining how to pass down various forms of wealth.

Source: valuewalk.com, “Plan For Tomorrow Through Proper Estate Planning Today“, Dec. 25, 2015