There are ways to gift to lesser ben­e­fi­cia­ries

Daily Local News (West Chester, PA) - - BUSINESS - Janet Col­li­ton Colum­nist

Most clients know when plan­ning their Wills who they want to name as their pri­mary or most im­por­tant ben­e­fi­ciary. They do strug­gle, though, sometimes for years, as to how to ben­e­fit oth­ers fur­ther down the line. There are ways to re­mem­ber other ben­e­fi­cia­ries at the time of your death.

For mar­ried cou­ples, us­ing the typ­i­cal Hus­band to Wife, Wife to Hus­band Wills, with re­main­der to the chil­dren when the sec­ond spouse dies, chil­dren do not in­herit un­til both par­ents die. Spouses ei­ther are sat­is­fied with this re­sult, do not re­al­ize this, or do not know how to han­dle this cir­cum­stance in any other way. If a par­ent wants to ben­e­fit his or her chil­dren, es­pe­cially those by a prior mar­riage, he might con­sider some dis­tri­bu­tion to his chil­dren on death for at least a por­tion of the es­tate. If this is a sec­ond mar­riage, dis­tri­bu­tions may need to be con­sid­ered care­fully. Tak­ing an­other ex­am­ple, a widow or wid­ower might fa­vor one child over an­other. This treads on dan­ger­ous ground since re­sent­ments may de­velop if one child be­comes the

Will’s sole ben­e­fi­ciary or most as­sets are jointly ti­tled with the par­ent. Par­ents ag­o­nize whether they should dis­trib­ute as­sets evenly re­gard­less whether one or more chil­dren have been more help­ful and avail­able to them than the rest.

Here are some sug­gested so­lu­tions.

• Fam­ily Agreement – Where one or more chil­dren con­trib­ute sub­stan­tially more to help ag­ing par­ents, a writ­ten payas-you-go agreement may help to ad­e­quately com­pen­sate them dur­ing your life­time.

• Ben­e­fi­ciary Des­ig­na­tions or Payable On Death Ac­counts. A quiet way to ben­e­fit those who help the most might be by mak­ing that per­son the ben­e­fi­ciary of life in­surance or of an IRA or other as­set. Life in­surance has an added ben­e­fit since it is the only as­set on which there is no in­her­i­tance tax. Where minor chil­dren are con­cerned, who can­not in­herit di­rectly any­way, life in­surance to a trust for the ben­e­fit of the minor ben­e­fi­ciary is a prac­ti­cal pos­si­bil­ity. This can ei­ther be done through a trust es­tab­lished by the Will or in a sep­a­rate stand­alone trust.

If the ben­e­fi­ciary is disabled or can­not han­dle money it may be bet­ter to set up a Sup­ple­men­tal Needs Trust or a Spend­thrift Trust ei­ther of which can be funded with life in­surance to han­dle the funds.

Nam­ing an adult child as a ben­e­fi­ciary of a life in­surance pol­icy can also be used as a tool to ben­e­fit one adult child with­out rais­ing the prob­lems as­so­ci­ated with nam­ing that child at a higher per­cent­age un­der the Will.

• Gift­ing Dur­ing Life. In­di­vid­u­als who want to pass on some­thing of them­selves as re­minders might con­sider gift­ing mem­o­rable items dur­ing their life­time. Jew­elry and per­sonal be­long­ings can eas­ily be gifted. If their ag­gre­gate value does not ex­ceed $14,000 to any one in­di­vid­ual in a given cal­en­dar year, no gift tax re­turn needs to be filed and, even for more valu­able items, the fil­ing of a gift tax re­turn ex­cept for ex­tremely large amounts and valu­able as­sets does not re­quire pay­ing any tax.

• Me­moranda Un­der the Will. When I first prac­ticed law, per­sons writ­ing their Wills of­ten in­cluded long lists of per­sonal items they wanted to pass by Will. These were cum­ber­some and needed to be up­dated reg­u­larly. To­day, more of­ten, Wills con­tain a pro­vi­sion that a Mem­o­ran­dum may be added to the Will des­ig­nat­ing cer­tain items to cer­tain per­sons.

• Spe­cific Be­quests. A spe­cific be­quest in a Will des­ig­nates spe­cific prop­erty to des­ig­nated in­di­vid­u­als. It could be an ac­tual dol­lar amount as in “I de­vise $10,000 to my Cousin Mary” or could name cer­tain prop­erty or ac­counts. If spe­cific prop­erty is named, it must be in ex­is­tence at the time of death in or­der to pass to the ben­e­fi­ciary. If, for in­stance, the maker of a Will states that his car should pass to son, John and then sells that car, the gift lapses. If the maker wants any au­to­mo­bile that he owns at the time of his death to pass to John, then he should state “or any car that I own at the time of my death.”

These res­o­lu­tions re­quire time and thought but can be well worth the ef­fort.

Janet Col­li­ton, Esq., lim­its her prac­tice, Col­li­ton El­der Law As­socs, PC, to el­der law, Med­i­caid, Medi­care, ben­e­fits, life care, special needs, and es­tate plan­ning and es­tate ad­min­is­tra­tion with of­fices at 790 East Mar­ket St., Suite 250, West Ch­ester, PA 19382, 610-436-6674, col­li­ton@ col­li­ton­ She is a mem­ber of the Na­tional Academy of El­der Law At­tor­neys and, with Jeffrey Jones, CSA, co­founder of Life Tran­si­tion Ser­vices, LLC, a ser­vice for fam­i­lies with long-term care needs.

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