Diane has hosted Sunday dinners at her home for four decades. She wants her daughter to have the house someday, but she hasn't said so or put it in writing. Her son has already mentioned how much he loves the lakeside view.
Like Diane, you might want to leave someone a home, money, or other belongings. You don't need to settle every legal detail before you meet with an estate planning attorney. Answering four questions can help you clarify your wishes.
1. Which Assets Are You Leaving?
Describe the intended gift: Distinguish between leaving a particular property, such as a home at a certain address, and describing it more broadly, like the residence you own when you die. You may also want to leave family keepsakes or heirlooms.
Ownership: If applicable, check how the asset is owned and how it will pass when you die. See if it's held in a trust, jointly titled, or, for financial accounts, if it has a beneficiary designation. These arrangements can determine who receives it.
Bring any relevant records to your meeting with an attorney, who can ensure your plans are legally valid, easing the settlement process for your loved ones.
Also consider what happens if an asset changes before your death. What if you sell or replace it, or no longer own it? For instance, investments can change through stock splits, mergers, or reinvestment.
If you own property with a mortgage, decide if you want the recipient to inherit it with the outstanding debt or to have the estate pay off the loan. Tell your attorney your preference, including how it affects what remains for other beneficiaries.
2. Who Should Receive the Property?
Decide whether to name certain people or leave property to a group. If applicable, consider if the gift should include loved ones born or adopted later. If more than one person will receive the property, also choose whether they should own it together or whether it should be sold and the proceeds divided.
When appropriate, ask your intended heirs if they want a particular asset, like a family home, and if it makes sense, if they would be comfortable with sharing ownership. These conversations could inform your decisions. You can keep proposed shares and other details private and avoid making promises. If you anticipate conflict or pressure, discuss how to approach the conversation with your attorney first.
If your beneficiaries include members of a blended family, stepchildren, or someone who was adopted, ask your attorney how those relationships may affect your plans.
3. How Should the Beneficiary Receive the Assets?
Consider the beneficiary's age and financial management abilities, along with your preferences for when and how they should receive the inheritance. An outright gift gives the beneficiary direct control of the property. If applicable, a trust allows a trustee to manage and distribute it according to the trust's terms.
If your intended beneficiary receives public benefits like Supplemental Security Income (SSI) or Medicaid (MaineCare), an inheritance could affect their eligibility. Before you make decisions, talk to an attorney experienced in special needs planning, who can offer options for preserving those benefits.
4. What Happens If an Heir Dies Before You?
If Diane's daughter passes away before her, should the house go to her daughter's children, to her son, or to a charity? You can plan for the possibility a gift might not end up with the person you intend by:
• Naming an alternate recipient, such as the heir's descendants, another person, other heirs, or a charity.
• Deciding what should happen if the alternate recipient also can't inherit.
The wording of a will or trust and applicable state law determine what happens when a beneficiary dies before you. Maine has default rules for certain situations, which might not reflect your wishes. Share your preferences with your attorney.
Preparing for an Attorney Meeting
Make a preliminary list of the assets you want to leave and the people you want to receive them. Note any preferences about shared ownership, when beneficiaries should receive their inheritance, and who should receive a gift if the original beneficiary dies first.
Bring your list, relevant property titles, account records, and any questions you have.
Clear instructions: Tell your loved ones who should receive your property and how you want it distributed. LWP&E drafts legally valid documents that get ensconce clients' wishes in writing to spare their families guesswork later. To discuss your plans, contact us online or call (207) 377-6966.
