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Should My Estate Plan Leave Individual Assets to Specific Heirs?


When it comes to estate planning, some people want to go into great detail with respect to the distribution of individual assets. Such an approach may not always be advisable, however. Especially if you own assets that may fluctuate greatly in value over time, relying on an individual-asset approach when making your will or trust can lead to unexpected outcomes.

Let’s take a simple hypothetical example. Jessica has two children. Jessica also currently owns two mutual funds. She decides to treat her children “equally” by living one fund to each child.

At the time Jessica made her will, the two mutual funds were worth roughly the same amount, let’s say $100,000. But by the time Jessica passed away several years later, the first mutual fund was now worth $200,000, while the second one was only worth $125,000. One child is therefore left with a lower inheritance, even though that was not what Jessica intended.

A more sensible estate planning move would have been for Jessica to state that each child was entitled to 50 percent of her estate upon death without making a specific gift of any particular assets. That is to say, when Jessica died, her estate would take the combined value of the two mutual funds and divide the proceeds in half equally between the two children. This way neither child feels slighted.

Of course, there may be situations where it is still desirable to leave a specific asset to a particular beneficiary. If you own a house, for instance, you may want a specific child to receive it upon your death, rather than divide ownership among multiple children. Similarly, if you own a business it may make more sense to leave it to one person.

Even in these scenarios, you can still ensure that no heir is left out of your estate plan. One method would be to transfer all of your assets into a trust. The trust instrument could then instruct your successor trustee to ensure each beneficiary receives a specified share of the trust’s assets, but with the stipulation that certain assets should be included at “fair market value” as part of an individual’s share.

Say James has three children. He creates a trust with instructions to give each child an equal one-third share of the trust’s assets upon his death. But James also wants his eldest daughter to receive his house. The trust instrument would therefore state the daughter will receive the house as part of her share; the trustee would then value the house at the fair-market value at the time of James’ death.

Get Help from a Lee County, Florida, Estate Planning Lawyer Today

Obviously, every estate planning situation is unique. What works for one person may not work for you. That is why it is critical to work with an experienced Fort Myers estate planning attorney who can help tailor a will or trust to your specific needs. Contact the Kuhn Law Firm, P.A., at 239-333-4529 to schedule a free confidential estate planning consultation today.

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