18 September 2019

You have a free hand in naming beneficiaries and how they’ll share your bequests.

Except for the requirement of providing for your spouse, if you have one, there are no rules about who your beneficiaries are. You can leave your property to family and friends, to organizations and institutions, even to your pets. By the same token, you can leave potential heirs little or nothing.

The only legacies that are turned down with any regularity are those in which property such as a house or a collection of something is given to a charitable organization without providing money for the property’s upkeep. It’s hard to imagine a Picasso would be rejected anywhere, but if you’re making bequests that will end up costing the beneficiary money, you ought to get approval first.

Naming your beneficiaries

In naming your beneficiaries, you should be as specific as possible, especially in cases where identities might be confused. Presumably you have only one cousin named John. But if you leave him the bulk of your estate, you run fewer risks by identifying him more precisely. The same is true for colleges and universities, and for other institutions or organizations that may have similar names and may make a claim for your bequest by arguing that they have every reason to expect you to be generous. Conflicts not only create bad feelings. Any disputes that must be resolved in the courts cost money and time.

Outliving your heirs

If you live a long life, you have to consider the possibility that the beneficiaries you name in your will may no longer be around when you die. Do you want the money you’ve set aside for an old friend to go to her spouse if she dies before you do? If not, you can specify that your bequest is valid only if your friend survives you. If she doesn’t, the money goes back into the general estate.

If the beneficiaries are your descendants, generally your children and grandchildren, known in the law as your issue, there is specific language you can use to designate the way your bequests will be made. If you leave an inheritance to your issue surviving you per stirpes, then your children’s children divide the share their parent would have received. If you leave the inheritance per capita, then each surviving issue gets an equal share.

Multiple families

If you’ve been married more than once and have children from different marriages, it’s important to spell out your wishes in your will. For example, if both partners in a current marriage have children of their own, they may want to leave the bulk of their own estates ultimately to their own children. If that’s not clear in each partner’s will, however, there could be some legitimately unhappy children.

Keeping up-to-date

It’s important to check your will on a regular schedule — every few years, for example — to be sure it still contains the provisions you want. If there’s a major change in your financial circumstances or your family structure, you should revise your will immediately. A new spouse or a new child, for example, must be taken into account. Otherwise, some sections of the outdated document, and maybe the whole thing, can be thrown out and the estate settled as if you had died intestate.

Special situations

If you’re not married, but want to leave your estate to a long-time companion, it’s especially important that you have a will that makes your bequest clear. Inheritance laws don’t usually recognize common-law marriages or any nonmarital relationships, however permanent they are. That’s true even in states where you can register as domestic partners or qualify for benefits like health insurance coverage for your domestic partner.

You can simplify the situation by avoiding the probate process, either by owning property jointly, or by naming your partner as beneficiary on retirement plans and insurance policies. Those assets become your partner’s directly. And, you can consider creating a trust naming your partner as beneficiary. Trusts are more difficult to contest than wills, something that may be important if your family is not happy about your domestic situation.

It’s all over

A marriage or a divorce decree may revoke your will, so you’ll want to draw up a new will immediately, especially if there are custody issues or large amounts at stake.

This information is provided with the understanding that the authors and publishers are not engaged in rendering financial, accounting or legal advice, and they assume no legal responsibility for the completeness or accuracy of the contents. Some charts and graphs have been edited for illustrative purposes. The text is based on information available at time of publication. Readers should consult a financial professional about their own situation before acting on any information.

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