An often-overlooked aspect of estate planning is preparing beneficiaries to receive money and property.
With all of the thought that goes into making sure taxes are minimized, probate is avoided, and accounts and property are protected, few clients give sufficient thought as to whether their beneficiaries have been adequately prepared to suddenly receive large amounts of cash or manage property.
Working through the following questions with your beneficiaries can pay huge dividends by ensuring that they are prepared to receive your accounts and property:
If a family business makes up a large portion of your family’s wealth, have you identified who will continue to run the business if you become incapacitated or suddenly pass away? Will your successor be a family member who has been working in the business, and is this person fully prepared to take over your role?
Perhaps the wealth of your estate is made up of a complicated portfolio of stocks, bonds, cash, and investment accounts. If that is the case, do your beneficiaries understand the basics of investing with these types of accounts? Do they understand the tax implications?
Even something as seemingly innocuous as passing on a family vacation property to adult children can pose a risk of rekindling old sibling rivalries. What do you hope your beneficiaries will do with the property you leave to them? Have you asked them whether they even want the property, or in what manner they would like to receive it? Many parents have been completely surprised at their children’s responses to these questions.
Preparing your beneficiaries to receive money and property can in many ways be an even greater challenge than preparing your money and property for your beneficiaries. If you are uncertain about where you should start, please reach out to us.
We have significant experience helping our clients determine the right questions to ask to begin this important process.