Creative ways to gift to children and spouses

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. • Remembering children on 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. Note that the surviving parent today might live to be over 100 years old before their children inherit. 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 or she might consider some distribution to children on the first death for at least a portion of the estate.

Where this is a second marriage, distributions may need to be considered carefully. Will the children by your first marriage be resentful if you leave everything to your current spouse? Possibly some portion of your estate or some sentimental items could be left to them on your death even if your current spouse is still living.

• The favored child. Taking another example, widows and widowers favoring one child over others might tread on dangerous ground unless that child performed services over and above their siblings and the others recognize it. There are alternatives that can reward that child even if the Will on its face might state that it leaves assets equally.

Here are some suggested solutions.

• Family Agreement – Where one or more children contribute substantially more to help aging parents, a written pay-as-yougo 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. The Will could still say equal division to the children but the parent can effectively reward a child who has been most helpful. Life insurance to a child has an added benefit since it is the only asset on which there is no inheritance tax.

• 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 cal-

endar 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. The Memorandum can be easily removed and replaced with another without needing to redo the Will.

• 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 Associates 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, 610-4366674, colliton@collitonlaw.com. 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.

Tune in on Wednesdays at 4 p.m. to radio WCHE 1520, “50+ Planning Ahead,” with Janet Colliton, Colliton Elder Law Associates, and Phil McFadden, Home Instead Senior Care. Live streaming is available at that time on www.wche1520.com.