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Estate and Trusts

Ensuring a Fair and Equal Share for Your Beneficiaries

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Realtors always cite the mantra of “Location, location, location” when explaining why some properties are worth so much more than others. If you were lucky enough to buy your family home decades ago in an area that has now become extremely desirable, you know that buyers are usually willing to pay top dollar for properties in your area.

Although you’re probably delighted that your home has become so valuable, it’s created something of an estate planning dilemma for you. Only one of your three children is interested in living in the family home after you die. The other two have said they have no plans or desire to move back to where they grew up. But you want all of your children to share equally in your estate. Since your house now accounts for the greatest portion of your net worth, how can you be certain that all three will be taken care of fairly?

Finding a Fair Solution
One way to work around this potential problem is to consider buying a life insurance policy. Essentially, you would look to buy a policy with a death benefit that’s large enough to make up for the projected market value of the property you wish to leave to one child. Upon your death, the proceeds of the life insurance policy would be distributed to your two other children.

For example, if the anticipated value of your home is $2.5 million, you could establish an irrevocable life insurance trust (ILIT) and buy a $5 million life insurance policy with the ILIT as the owner and beneficiary of the policy. You could then name your two other children as the equal beneficiaries of the ILIT. When you pass on, the child who wants the family home inherits it and your other children split the insurance policy’s proceeds equally.

The bottom line is that life insurance can be a very effective tool for equalizing inheritance among heirs. This strategy can also be used if there is a family business, farm, or vacation property you wish to leave to one child. Of course, estate planning is a complex and ongoing process. The input of an experienced financial professional can be very helpful.

Estate Settlement Services

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Close up focus on keys in happy African American woman hand, smiling satisfied young female tenant homeowner excited by relocation, purchasing first own apartment home, ownership and safety conceptLike most successful people, you want to be certain that what you have spent a lifetime building will be passed on to your heirs in the manner you desire. Retaining an attorney to draft a will is a critical first step in achieving this goal. It’s equally important that you carefully select a personal representative (or executor) to carry out the instructions in your will.

What Is at Stake

Your choice of personal representative may determine how effectively and quickly your estate is settled. Ideally, your personal representative should have the skills and experience to ensure that your estate will be administered properly under your state’s laws. Also, you should have a level of trust that your representative will carry out your instructions in a way that protects your heirs financially.

Estate Settlement Is a Complex Undertaking

A qualified personal representative will:

  • Locate your will
  • Consult with your attorney
  • Obtain court authority (probate the will)
  • Determine your family’s immediate needs and arrange for support and maintenance payments to be made to dependents while your estate is being settled, as allowed under the terms of your will

Once the estate administration process starts, he or she will:

  • Keep estate assets secure
  • Contact life insurance companies
  • File claims for any retirement, Social Security, and veterans benefits
  • Collect outstanding debts
  • Inform creditors of your death
  • Pay bills
  • Sell property as you have directed or that needs to be sold within the executor’s discretion to meet estate taxes or debts or to facilitate bequests under your will
  • Maintain timely and accurate records of all estate-related transactions
  • Record and inform your heirs and the probate court of all estate transactions
  • Prepare and file all required federal and state income and estate tax returns
  • Distribute probate property to your beneficiaries

Another Option

Given the complexity of all that’s involved in settling an estate, it may make sense to name an institution as your personal representative. If, however, you are more comfortable with the thought of a relative or friend settling your estate, you have the option of naming the individual and the institution as co-personal representatives. The person you’ve selected will be involved in all estate-related decisions but can leave the administrative and asset management duties in the hands of the institution.

And to My Executor, I Leave My Passwords

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A pleased young couple shaking hands with their financial advisorWhat would the consequences be if, after your death, no one could access the information you have stored electronically? If you’ve protected your accounts or files with passwords, it could easily happen.

Computers have changed the way we manage our personal and financial — and often, our professional — lives. And they’ve also created new challenges for estate planning. Consider, for example, an Internet business left in limbo because the owner made no provision for accessing accounts. Running the business — or even making customers and creditors aware of the situation — would be problematic without access to the owner’s digital records.

But business accounts and records aren’t the only potential casualties. Personal e-mail, address books, photo libraries, and financial information are also at risk of being lost if the decedent hasn’t shared passwords or designated someone in his or her will to have access to the records.

The legal treatment of digital assets remains a problem for the courts. Meanwhile, it’s important to revise your estate planning documents to include passwords and authorize access to your online and other protected computer data.

A Checklist for Your Digital Assets

  • Determine what and how valuable your digital assets are.
  • Give your executor or personal representative instructions for locating them.
  • Share your passwords with the person you’ve designated to have access, and/or include a list with your estate documents.
  • Instruct your representative to delete files containing sensitive information.
  • Make provisions to renew business URLs after your death, so they won’t be lost.
  • Plan for the disposal or transfer of digital assets just as you would for tangible assets.