How to Choose Beneficiaries for Your Trust
One of the most important parts of estate planning is deciding who your beneficiaries are going to be. Your beneficiaries are anyone who receives assets from your living trust after you pass on. It can be very difficult to decide who is going to inherit your assets, particularly if you have a big family or lots of close friends. This is a decision that should not be made lightly, and you should continue to think about it throughout your life. Keep in mind that living trusts are adjustable, so you can always change your beneficiaries later on if circumstances change.
Your partner is usually the first beneficiary that you should consider for your will. Keep in mind that if you are married, your spouse will automatically get any assets that are held jointly. If you are not married, you will need to specify which assets your partner is to receive from your trust. If you have been divorced previously, you’ll need to make sure that all your assets are held in your name only and that nothing continues to be held jointly. Generally, most people want to pass on most of their assets to their partner to manage.
After your partner, your children are the next big consideration. You’ll need to consider which assets should go to which children and how you want to split up your money. Many people choose to just split their assets evenly among their children, but there may be instances where it makes more sense to split the money or other assets unevenly. For example, you may have one child who has special medical needs that cost money to treat, so you’ll want to pass on more money to them.
If you have other close relatives or close friends, you may want to consider passing on some of your assets to them as well. For example, many people have nieces or nephews that are as close to them as children, and so it makes sense that they would want to give them something. If you have a very close friend who you want to pass something onto, you can include them in your will as well. It’s important to consider not only the sentimental value of passing something onto someone, but also the practicality of it. For physical items, who will be the best person to care for your property and ensure that it stays in good shape? With money, who will be able to spend it wisely, or invest it to make money? These are important questions to think about before passing something on to anyone in your life.
If you own a business, you’ll need to consider who you want to pass it on to. You’ll likely have already transferred the business to someone before you pass anyway, but it’s still important to name a beneficiary in your will that can handle the responsibility of owning and managing a business. For many people, a current employee or business partner is a good choice for this, because they already know the ropes and won’t have a huge learning curve to face when they actually own the business. Many people also choose to keep their businesses in the family – just be sure to ask your beneficiary if they are comfortable with it before officially putting them in your will.
Choosing the beneficiaries for your trust can be a difficult process, but it’s important to go with your gut and choose the people who are truly the best to manage your assets. If you are having difficulty deciding how you want to split up your money, consider working with an estate planning expert who can help you.
