Tuesday, March 6, 2018

Legacies and Legatees - Not Always the Perfect Match

“As baby boomers grow older, the volume of unwanted keepsakes and family heirlooms is poised to grow – along with the number of delicate conversations about what to do with them…As these waves of older adults start moving to smaller dwellings…they and their kin will have to part with household possessions that the heirs simply don’t want.”

And what if the household possessions were still owned by the parents up until their death? One of an estate executor’s most onerous talks is listing the estate’s assets for the court and for the heirs. The executor, most often a sibling or adult child, needs to gather proof of ownership and get appraisals for heirlooms, jewelry, artwork, antiques, and vehicles.

At the law firm of Rebecca W. Geyer & Associates, where our goal is to be a resource to clients, we know that you want to protect not only the people most important to you, but the assets you’ve worked a lifetime to achieve.  Sometimes, though, when your assets include “stuff”,
stuff your heirs are unlikely to find useful or valued, there is a problem. How can you “rightsize” now, while making your estate plan more streamlined and effective when the time comes?

It’s always best when your gift or legacy is a perfect match with the goals and tastes of the recipient. In a former blog post, for example, we shared a story of a woman who had taught music at her home for many years and who owned close to 300 music books. The happy outcome involved a gift to a charity that provided piano lessons to underprivileged youngsters.

It’s not always that antique china cabinet with the heirloom dinner plates that turns out to be the gift that is more of a burden than a blessing to heirs. There are some types of legacy that heirs might be better off without:

  • Property that is subject to a mortgage or lien
  • Property that has some form of contamination or pollution problem.
  • A share in a business you own that is totally unrelated to the heir’s abilities and interests
When leaving assets to heirs, consider each one’s tax brackets. As HFS Wealth Management points out, “an inheritance is generally worth only what your heirs get to keep after taxes are paid.” Naming an heir as beneficiary of a 401K or IRA is different from naming that heir as beneficiary of your Roth IRA account.

“A growing number of adult children are providing care for elderly parents, and they may feel resentful if they have to share an inheritance equally with siblings who didn’t help out, Eleanor Laise writes in Kiplinger. When a vacation home is left to multiple heirs, those children may not have an equal ability to take advantage of that gift, depending on their own family situation, work demands, and distance.

Legacies and legatees may not always be the perfect match!

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