choosing a beneficiary

Who Should You Choose As Your Estate Beneficiary?

Along with writing a will and naming a successor trustee, choosing a beneficiary is one of the most important elements of a good estate plan. At Phelps LaClair, we have 40 years of experience helping people to successfully pass on the wealth they have spent a lifetime accumulating. Part of the success lies in naming beneficiaries who are responsible and who will benefit from the inheritance they receive. Here are some considerations on how to choose the right beneficiary for your estate.

1. Dependents

If there are people who depend on you for financial security, naming them as a beneficiary is a logical choice. For most people, this would include family members—particularly a spouse and children. A spouse may need to have the safety net that your assets would provide. Children and grandchildren may need funding for a college education or a business startup. With a properly designed trust, these needs can be met without the danger of lawsuits and claims against the inheritance, or irresponsible spending by the beneficiary.

If you are the parent of a special needs child, there are trusts that can be used to provide for their lifestyle and care without endangering or disqualifying any government benefits they may receive.

2. Real Estate

Your principal residence will most likely be left to your spouse if you are married. It may also be given to your children. If you have vacation homes, rental properties, timeshares, etc. you will need to name beneficiaries for those properties as well. With blended families, be sensitive and specific concerning who receives what.

3. Personal Items

You may have certain possessions that carry sentimental value for particular friends or family. If your musically inclined nephew has always admired your vintage guitar, for example, you can leave it to him apart from any other inheritance he may or may not end up receiving.

Antiques and artwork can be left to individuals, galleries or museums if you desire. They can also be earmarked for auction with the proceeds going to specific beneficiaries.

Automobiles, boats and other machinery or tools can be bequeathed to individuals, as well. They can also be donated to charities, non-profit organizations, schools and foundations. It is a good idea to keep a list of valuable items and who you intend to leave them to.

4. Philanthropy

Many people desire to give back to the community that has helped them to succeed. A charity can distribute financial aid to those in need. A scholarship fund or endowment can be established with a school or university. A business mentoring program can be funded. A community recreation center can be blessed to receive funding to improve or expand facilities.

There are almost endless possibilities in the realm of philanthropy for you to name as beneficiaries to all or portions of your estate. As an example, James Michener and his wife left a fortune worth hundreds of millions of dollars to educational, cultural, and writing institutions. They also left millions more to an art museum in his hometown.

Choosing a Beneficiary

As you can see, there are many ways to bequeath an inheritance that will bring life and increase to those who receive it. As with all other aspects of a great estate plan, your beneficiary list should be reviewed and updated on a regular basis. The entities you choose today may not be the ones you would choose in the future.

At Phelps LaClair, we recommend that you update your estate plan at least every three years. Give us a call for a free consultation, or to schedule a review of your plan. Either way, we hope to see you soon.



Images used under creative commons license (Commercial Use) 01/26/21  Photo by Tyler Nix on Unsplash


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