Have you spent any amount of time thinking about who you should include in your will or another important document as a beneficiary? Maybe you are just starting on your journey towards estate planning and have some questions about what a beneficiary is and why you need one (or more). Wherever you are in this process the Law Office of Bryan Fagan wants to help you learn more about beneficiaries, how they fit into your estate planning process and how to best select one for your will. Stick around and we will discuss these topics and more in today's blog post.
Take the time necessary to decide about naming a beneficiary
Sometimes the person who you want to be your beneficiary under a will can be obvious. Depending on your life and circumstances it may not even be a person. A charity, church, or other organization may be an important beneficiary under your will. It just depends on your priorities, life, and other situations that lead you to name a beneficiary or beneficiaries for certain property or assets of yours. Remember- when you draft a will you take control of your finances and get to determine where your property goes after you pass away. This is a great advantage over the person who does not take the steps necessary to draft a will. In that case, the government will decide for you.
Making the decision of whom or what should get your assets when you pass away is an important decision. It requires (or should require) some thought about your priorities, the needs of your family members, and many other factors. The fact of the matter is that you do not need to choose only from your immediate family when it comes to selecting a beneficiary. Rather, just about anyone or any organization can be selected as a beneficiary under your will. Most people have more than one beneficiary. Do not assume that you can only select your children or spouse as a beneficiary under your will.
Who should you choose to receive your assets after you die?
It is best to take your time and to think through the issues of your case when you are making decisions about who or what should be able to inherit property from you upon your passing. This is your legacy that we are discussing and all your hard work throughout your lifetime can be impacted by one bad decision when it comes to naming a beneficiary. You should be clear about what people or entities are most deserving of the money to which people or entities you would like to give your money. Sometimes, those groups are not the same. As a result, you may objectively believe that one group, entity, or person is deserving of the money but if your heart is telling you otherwise This is why you need to think through these issues to be clear about who you want to receive your property.
As we mentioned a moment ago, most people end up choosing their spouse or children to receive the lion's share of their property. This may be exactly what you want to do depending upon their needs, your relationship with them, and a host of other factors. However, if you are not close to your children, your children do not associate with you, or you believe that your children are not capable of making good decisions when it comes to finances then you may be interested in other options when it comes to allocating your property after your passing. These are the types of questions that I really cannot help you answer in today's blog post. The best we can do in this space is to help you sort through the decisions and eventually help you arrive at a thought process that will generate outcomes that are preferable for you and your family. What works well for one family may not work for yours and vice versa.
However, if this is still a question that is giving you some degree of difficulty when it comes to your estate planning then the attorneys with the Law Office of Bryan Fagan can help you. We can talk about the different options available to you and think about the steps of estate planning out loud with you. You may be in a condition where simply having some objective advice and perspective related to estate planning may be just what you needed to complete your estate plan and travel wheel drafted. Our attorneys can help you not only with the actual mechanics of drafting a document but also in thinking about how you want to structure the will or other estate planning document.
Primary beneficiary: who should it be?
One of the most critical questions for you to answer during this Process is who you should select to be your primary beneficiary under certain accounts like retirement accounts. If you are married, then likely it will be your spouse that you select to be your primary beneficiary. This is since you probably have chosen each other to be your primary beneficiaries on your retirement accounts and other financial vehicles specifically for life insurance and retirement account purposes.
After a primary beneficiary is selected then you would need to select a secondary beneficiary. A secondary beneficiary is a person who would be able to receive property in your name if a primary beneficiary was not able to do so. For example, Let's suppose that you and your spouse were riding in the car together coming home from dinner. If you both passed away in a motor vehicle accident this would mean that your estate planning would go into place when it came to subjects like life insurance and your retirement accounts. For this type of account, you typically need to list multiple beneficiaries.
If you have listed your spouse as your primary beneficiary then you may miss your children, for example, as a secondary beneficiary. Most retirement plans or other accounts like this do not allow you to engage in detailed financial for state planning when it comes to providing money between multiple children but at the very least you can list your children as the beneficiaries of an account if your spouse is not able to receive property in your name after your passing.
A question that many people ask regarding estate planning matters is what can happen if you and your spouse have children who are under the age of 18. In a situation like this, you need to make sure that preparations have been put in place to take care of your children if your spouse passes away before you do whereas otherwise unable to manage money or property on behalf of your minor children. This is what I was mentioning a moment ago and you cannot simply list out your minor children as secondary beneficiaries under retirement or life insurance policy. In those cases, you would need to go the extra step and engage in some actual estate planning to make sure that your minor children are cared for in this regard.
Leaving assets to your children or a guardian
In Texas, a testamentary trust may be exactly what you need to investigate when it comes to protecting your minor children if you and your spouse pass away while they are still minors. A testamentary trust would be included in your and your spouse’s wills. Typically, in a mirror image will, your spouse and your wheels would look the same. As a result, the testamentary trust that you create in this document would have the same language. Here is what a testamentary trust can do and how a testamentary trust can positively impact your family if you and your spouse pass away unexpectedly.
A testamentary trust could establish a guardian for both your children if you were to pass away. It is scary to think about a situation where you are unable to care for your kids. However, being able to select a guardian for them is it great advantage when it comes to estate planning. Rather than putting your family and your children through a situation where the government would need to select a guardian from your family, You and your spouse could take matters into your own hands and make that selection in advance. It is a wise idea to touch base with the person that you select to be the guardian to make sure that he or she is aware of the responsibilities and your wishes. So long as they are on board with the decision then you should feel comfortable naming that person and placing the responsibility upon them.
Once a guardian has been selected and named within your will you can then determine how the assets that will be going to your children should be allocated in spent. This is an important designation. The more specific you can be the better equipped a trustee or guardian can be when dividing up money and assets. Again, this is the money that you have earned set aside for your children in the event of your passing. The last thing you want to do is be less specific in the language included in this type of trust and to see a guardian or trustee utilize the funds in a way that you do not approve of.
One thing I will point out is that if you choose to leave your assets directly to a guardian then you are Basically allowing him or her to own the property and therefore, they can make decisions about how to spend it however they want. While you certainly want the guardian to be able to make decisions for your children and care for your children you probably do not want them to enter hundreds of thousands or millions of dollars and then hope that they spend it wisely and on your children. The reality of the situation is that you can never be too trusting of how a person will spend your money. While you may have a lot of trust in that person in many regards the last thing you want to do is place too much trust in him or her only to see them fail to live up to the responsibilities that you have placed in them. Caring for your children it's one thing. Being able to spend the money you have left to your children however the guardian would like is a completely different matter.
By the same token, you probably do not want to try and leave money directly to your children when they are minors. Minor children are not well equipped to spend money. Technically, children cannot even own property. As a result, you do not want to put the validity or intentions of your will at issue in any regard. On the contrary, it is probably best to find some middle ground when it comes to allocating property for your children after your passing while they are still minors.
The testamentary trust is the most sensible method of doing so that I am aware of. These testamentary trusts would allow you to place property within them and appoint a trustee who would care for them based on the terms of the trust. In many cases, the trustee is the same person you have named as a guardian for your children. A trustee would be able to care for and allocate the property based on your wishes however you choose until your children become of age.
For instance, consider a situation where you have left what amounts to $1,000,000 for your children after you pass away. Given the substantial nature of the money contained in your trust, it would be wise to have a plan for the trustee to follow when it comes to allocating those monies. You may want to have some money go towards buying your child a car when he or she turns 16, college when he or she graduates from high school, and any other costs that are associated with their education. The details of this are up to you in the circumstances that your family is in currently while you can never predict with 100% accuracy what will happen with your family over a certain period you can be considerate of your circumstances now and then do your best to guess what they will be in the future.
Advantages of a trust
When many people hear the word trusts, they automatically assume that this is a subject related to only wealthy people. However, it doesn't matter how wealthy you are when it comes to creating trust. All that matters is that you are forward-thinking and proactive about handling money for your family now and in the future. Creating trust does not have to be complicated especially when you are working with an experienced estate planning attorney with the Law Office of Bryan Fagan. Our attorneys can walk you through the creation of a trust and discuss with you what kind of arrangement may be for the best when it comes to estate planning for you and your family now and in the future.
An advantage to a trust is that you can bypass the probate process by having one. Not having to go through probate can save you time and money. More specifically, it would save your family time and money by not having to go through the probate process to have a judge approve how property viewers will be distributed upon your passing. You can speak with one of our experienced estate planning attorneys when it comes to handling matters like this.
Above all else, in my opinion, the best thing about creating trust is that it allows you to have the most direct say so over your property that I can think of. Trusts and wills both allow you to dictate the terms of how your property will be spent in allocated after you pass away. While things may turn out just fine were you to never create any kind of estate planning document, there is certainly a high degree of risk that is a part of this conversation. As such, I would not leave it to chance for your property to be handled and allocated exactly how you want by the government after your passing. Rather, consider diligent estate planning as a gift to yourself and your family in this regard.
With questions about the material contained in today's blog post? Contact the Law Office of Bryan Fagan
If you have any questions about the material contained in today's blog post, please do not hesitate to contact the Law Office of Bryan Fagan. Our licensed estate planning attorneys offer free of charge consultations six days a week at our three Houston area locations, over the phone, and via video. These consultations are a great way for you to learn more about the estate planning and probate areas of the law as well as about how your family may be impacted by the filing of a probate case or the need to begin an estate planning. Thank you for your time and interest and we hope that you will join us again tomorrow as we continue to share interesting information about the world of Texas estate planning and probate law.