You may be wondering what is the best way to divide an estate in a will. Your reasoning for asking this may be fairness to your beneficiaries, attempts to avoid tax penalties, or a number of other reasons. Continue reading to learn more about the division of your estate.
Before we dig into how to divide an estate in a will, let’s talk about the things that make up your estate.
Tangible Personal Property
Tangible personal property is just that. Property that you personally own and can hold, but the twist is this property can be relocated. This spans from items of high value (such as fine art, jewelry, and vehicles) to that worthless thimble collection. Some items may not hold monetary value, but they are deeply sentimental to you. These items all comprise your tangible personal property.
Real Estate
We all know what real estate is, but in terms of estate planning real estate is land aka property that cannot be relocated. Sometimes real estate is owned individually or jointly.
Read more about real estate titling here.
Accounts with Beneficiary Designations
These accounts are assets that you own or insurance policies that you hold that have a beneficiary designation. These are a part of your estate that are typically not divided under the terms of a Will or Trust. For example: a bank account that is payable on death to a beneficiary, or a life insurance policy that names a beneficiary to receive funds upon the death of the insured.
Residuary
This is the junk drawer of estate planning. It catches everything that doesn’t fall into one of the categories above. It also catches any of the items listed above that you don’t identify as going to a specific beneficiary.
Things to Consider When Dividing an Estate
Okay, so now that we understand what we’re dividing in an estate plan, let’s talk about how you can divide an estate.
The truth is you can divide it any way you want!
You are the owner of the estate until you die, so you do get the final say on what goes into your estate plan. There are some things to keep in mind, though.
Capacity of the Beneficiary
It is important to understand the capacity of the beneficiary you are naming. Is the person disabled and receiving disability benefits (SSI)? If so, a special needs trust will likely be needed to make sure their inheritance doesn’t disqualify them from needed benefits and assistance. Does the beneficiary have a substance abuse or gambling problem? Safeguards through a trust should likely be put in place to ensure the inheritance is helpful rather than harmful. Is the person still a minor? Having a trust in place will make it so the court doesn’t have to appoint a conservator for the child.
If there is something that gives you pause or concerns you about a beneficiary you would like to name, tell your attorney. There are so many tools that can be utilized to ensure the inheritance is a blessing, not a curse.
Relationship of the Beneficiary
Many families today are blended. This is such a beautiful representation of what a family can be and is. Sadly, many states do not recognize stepchildren or unmarried life partners as heirs. So, if you wish to include loved ones who aren’t considered heirs by the state, you have to name that clearly in your estate plan.
So, back to the question at hand: how do you divide an estate?
This really is a personal decision. Every estate, person, and family is different.
Many people choose to leave everything to the surviving spouse. Others choose to divide everything evenly among their children. Some leave everything to charity. Some leave one child their real estate, and use beneficiary designations for the life insurance policy to another child while directing that the tangible personal property and residuary be divided evenly between the two.
There is no one-size-fits-all answer to this question. The best thing to do is to consult with an experienced estate planning attorney. Share everything about your estate and desired beneficiaries with them. They will help you determine which tools are needed and how to divide your estate in a way that serves your needs and desires.
We know that having an estate plan is important, and making sure it says what you want it to say is even more important. We can help you figure out exactly how to divide your assets upon your death. We are here to help and offer peace of mind and relief. Call us at (404) 736-6066 or visit our website to schedule a consultation.
