Think About What Assets You Are Leaving In Your Estate Plan

When you make an estate plan, it can be very easy and very tempting to just take everything that you own, and divide it amongst your family—especially if you don’t have a lot of assets, or if you don’t have a lot of family.

We often give thought to our family, and who needs or deserves what asset—but we rarely give thought to the assets themselves. It’s often like we are just dumping a bunch of (often valuable) items at someone’s doorstep through our estate plan, without thought to the assets themselves.

What should you consider when it comes to the assets that you are leaving to your beneficiaries?

Existing Contracts

A lot of our assets are burdened by contracts or agreements.

So, for example, let’s say that you are a part owner of an LLC that has a management agreement. That management agreement may say how the LLC passes—so if you leave your interest in the LLC to a family member, that family member could have a problem, if that conflicts with the management agreement for the LLC.

The same problems arise in marital settlement agreements, or other contracts that we make during life, like bank payable on death accounts, which can conflict with what we say in a will or trust.

Specialized Knowledge or Expertise

Some assets just take knowledge to run, or to run properly. You can leave your commercial office building to a family member, but does he or she have any experience running (and making profitable) a commercial office building? The same goes for intellectual property—does your beneficiary know how to monetize, protect, or license the intellectual property?

With these kinds of assets, you may consider a trust, where a professional trustee can manage the property (or other asset), and your beneficiary can reap the profits.

Cost to Keep or Maintain

A lot of what we leave takes money to maintain. The obvious one is property—leaving a home to a family member is great, unless there’s no money to pay the taxes or insurance on that property, or money to fix the roof when it needs repair, or dues on the timeshare that you are leaving to someone in your will.

Anything that needs money to run, keep, own or operate—yes, including pets—should be left along with a fund to help care for, manage, or house that asset.

Public Benefits

If you have loved ones that are on or who receive needed public benefits, your “gift” can be the opposite; it can end up disqualifying your loved one from a necessary public benefit.

There are ways around this, by using trusts designated to protect public benefits—but just leaving money or assets to someone, can end up kicking them off of needed government aid that they may now, or in the future, need to receive.

Call the Torrance will and estate attorneys at Samuel Ford Law today to make sure your estate plan does what you want it to do, for the people you want to help.

Sources:

thearcca.org/info-resources/special-needs-trust-calable/#:~:text=The%20Special%20Needs%20Trust%20can,beneficiary%20of%20life%20insurance%20policies.

animallaw.info/statute/ca-trusts-%C2%A7-15212-trusts-care-animals-duration-requirements-accountings-beneficiaries