Three Things to Consider When Leaving Inheritances

07 Feb Three Things to Consider When Leaving Inheritances

From family heirlooms to property to wealth, people often have a variety of items to pass on to heirs. However, knowing what you have to pass down is usually easier to figure out than deciding who gets what. Divvying up your estate doesn’t have to be difficult or lead to family warfare. With a well thought out plan in place, you can make sure all your heirs are happy. Read on to discover three things to consider when deciding how to split inheritances among heirs.

1. What does fair mean to you and your heirs?

Many people try to keep things fair and equal among their heirs. In order to do so, people often give each heir the same amount of assets. However, life isn’t fair or equal, so odds are the inheritances you gift shouldn’t be, either. As discussed in this Pittsburgh Post-Gazette article, parents often provide one child with more financial support than the others throughout their life. If you’ve paid for a child’s education or loaned them money, it’s fair to consider leaving them less than their siblings since you’ve given them more already. Additionally, if one of your heirs has a medical disability, it makes sense for you to leave them more. That way, they will have access to the financial resources they need even after you’re gone. However, caution and communication are important if you go this route. You should talk to your heirs about why you’ve made the decision to split things unequally in order to avoid hurt feelings and family warfare. Since splitting things unequally often does cause conflict, many people choose to split things equally. Ultimately, you know your heirs best and can make the decision that’s best for everyone.

2. What value does an item or asset have?

Some items or assets in your estate have obvious, concrete value, such as bank accounts. Other assets, like stocks or houses, have a value that fluctuates with time. Then you have a third category of items, which don’t have any monetary value but are sentimentally valuable. When it comes to the first and second categories, it’s easy to figure out how to divvy up who gets what based on how you decide to split inheritances. The third category is where it gets tricky. Items with sentimental value are tricky to divide because if more than one heir wants an item, there’s no way to split it equally. You can’t just give an heir another item worth the same amount of money because they don’t want a sentimental item for its monetary value.

To solve this problem, you can go about dividing sentimental items in a variety of ways:

• • • Leave it to chance: Ask heirs if they’re interested in a sentimental item in order to see who wants it. Then, draw names out of a hat and let chance decide for you.
    • Split items equally: Divide up all the sentimental items in your estate and tell each heir they can only have one item.
    • Make the decision yourself: Give the item to a specific heir of your choice. It’s your estate, so you do have final say. However, if you choose this option, you should provide your heirs with an explanation as to why you’ve chosen a specific person to receive the item. This will help prevent hurt feelings and fights.

    The possibilities are endless when it comes to deciding how to divide sentimental items. Ultimately, you should choose the option that best fits your families needs.

    3. Do your heirs need a test run?

    Another important thing to consider when deciding how to leave inheritances is if your heirs need a test run with your assets. Suddenly receiving assets or being handed the family business could cause heirs to crash and burn, as explained in this Huff Post article. Assets could be wasted or the family business could struggle to stay afloat if your heirs aren’t prepared for the responsibility. One way to ensure your heirs are prepared is to give them a test run. With a test run, you can watch over your heirs and provide guidance. Your heirs will have a chance to ask questions and seek out advice on how to manage assets or run the business. If your heirs have experience with running the business or handling assets, they might not need a test run. Still, it doesn’t hurt to give them the chance to seek help while you’re still around.

    To contact Boyum Law Firm for help with estate planning, click here.