Creative ways to gift to children and spouses

The holiday season is a time when most of us think of gift giving. There are ways, longer range, to consider gifts to family and friends. 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 during life and at the time of your death.

For married couples, many use the typical Husband to Wife, Wife to Husband wills, with remainder going 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. 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.