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3 beneficiaries who may not control their own inheritances

On Behalf of | May 30, 2024 | Estate Planning

Someone who is drafting an estate plan may worry primarily about the comfort of their close loved ones. It is common for testators drafting estate plans to leave a large portion of their estates to specific people who rely on them, including close family members.

Unfortunately, sometimes the people selected as beneficiaries are not in a position to directly inherit assets from an estate and control that property. There are some scenarios in which testators may need to have more in-depth plans because the people they want to provide an inheritance to cannot possess or control that inheritance.

What beneficiaries may not be able to accept a direct inheritance left in a will?

Minor children

Any parent thinking about their future death inevitably worries about how their passing could affect their children. It is common for parents to leave most or everything in their estate to their children, but doing so can be a mistake if the children are still minors. Their surviving parent or the guardian who assumes responsibility for the children may have control over and access to the inheritance until they become adults themselves. Many parents move at least some of their children’s inheritance into trusts as a way to preserve it for them when they become adults.

Pets and companion animals

The bond between a human and an animal can be very profound. Dogs, cats and other companion animals can offer health benefits and provide an incentive to exercise. It is a noble impulse to want to provide for the support of a pet after dying. However, animals do not have any property ownership rights. Any assets allocated to a pet are likely to end up under the control of the person who assumes responsibility for the animal. That person could potentially retain those assets if they give the pet away or euthanize it. Establishing a pet trust can be a way to ensure that an animal has the support it needs without putting it at risk of being euthanized or abandoned by the people who want those resources.

Family members with special needs

Perhaps a spouse has an acquired brain injury that has diminished their ability to care for themselves. Maybe a parent has an adult child with Down syndrome. When there is a family member who has special needs, a large inheritance puts them at risk of financial abuse from other people. Caregivers and family members might try to manipulate that individual into giving up their inherited resources. A large inheritance could also end their state benefits that play a major role in maintaining their independence or quality of life. A special needs trust is a useful tool for those who want to improve the standard of living for a loved one with special needs without eliminating their eligibility for benefits or putting them at personal risk.

Talking about beneficiaries, personal resources and legacy goals with a skilled legal team can help people put together the most effective estate plans given their needs and hopes. Wills are useful estate planning tools but are not always the best solution for those who want to leave a lasting legacy.