Dividing the Estate for Your Beneficiaries

Trying to divide your estate can be challenging. Deciding who will inherit and what they will inherit is an emotional and overwhelming task. Here are some pointers for handling the situation, with ideas on what to do with your estate if your loved ones precede you in death.

The purpose of estate planning is to preserve your inheritance for your heirs. When naming beneficiaries in your will, consider both your assets and your beneficiaries' needs. You may also want to leave some of your estate as a charitable donation to a worthy cause. In this case, a charitable remainder trust will allow you to receive income from your assets during your life, but avoid estate taxes on those assets after your death.

You should update your last will and testament whenever a major life event occurs. A divorce or marriage may change how you want your assets to be distributed, and the birth of a new child or grandchild should be reflected in your will. However, in the case of a birth, the law will often assume that you intended the new child to be included in your will. If you do not want an heir to inherit any of your assets, it is wise to include them specifically in your will, perhaps by leaving them one dollar, or some other nominal inheritance.

When creating a living trust or a will, you should specify an alternate beneficiary. The premature death of your intended heir will result in their share of the inheritance going to the second beneficiary. A trust can help protect your estate in this situation by providing instructions to the trustee on who should receive the benefits of the trust if the chosen beneficiaries of the trust die before you or with you.

You cannot rely on changing your will in the event of a beneficiary's death. An accident might cause both your death and the death of your primary beneficiary. Your will needs to provide for the proper handling of your estate in this case.