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In this video series we are working through the five reasons why you need to do your estate planning. This video covers the third reason – so that you can protect your beneficiaries.
There are basically three situations in which you want to use your estate plan to provide protections for your beneficiaries:
The first is where your beneficiary CANNOT manage money on their own. This could be because they are minors or have a disability that makes them unable to be in charge of their own assets. In these situations, an estate plan should be set up so that an appropriate person is in charge of the money this beneficiary receives.
The second situation is where your beneficiary SHOULD NOT manage money on their own. They might just be younger and be inexperienced making wise financial decisions, or they might have creditor or spending issues. They might have an addiction that would make giving them an outright distribution a dangerous situation. In these situations, an estate plan should be set up so that an appropriate person is in charge of the money this beneficiary receives.
The third situation is where the beneficiary would do just fine managing their inheritance, but you’d still like to protect against the “what ifs” of life. For example, you can keep their inheritance protected from a future creditor, or from their spouse, or their spouse’s creditors. You can protect against the possibility of your beneficiary losing a part of their inheritance in a divorce. In these situations, the beneficiary could be in charge of their inheritance, but they could still receive it in a way that is protected.
A good estate plan creates a customized plan of distribution for each beneficiary, according to their strengths and challenges.
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