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Understand Who Gets What under Your Will’s Wording

Writing your own Will can be tricky. That’s because you’re not practiced in thinking about all the changes in circumstance that can radically alter who gets your legacy. You may think you know where your money will go but you may be wrong. This article gives you some examples that may stimulate more thought about making your own Will.

Circumstances are always changing – often faster or in ways we don’t anticipate. Is there a new child, a new spouse, or was there a death in your family? If so, then you’ll have to take these changes into account in your Will. Or, at your death things may go differently then you anticipated…a lot differently.

*Your Will violates the law:

What you state in your Will may not be consistent with your state law on inheritance. The county’s probate court may override your Will for various reasons – one of which is non-conformance with state law. State laws often require that a surviving spouse be entitled to a third, or as much as half, of your estate. So make provisions accordingly.

But if you’ve provided accordingly for your spouse, then at her or his death your Will may cause a substantial amount of your estate to shift to other beneficiaries. In that case you may want to re-evaluate who gets what.

*How distributions go to ‘your issue’:

Let’s suppose your spouse has died, so you rewrite your Will. Now you leave your entire estate equally to your two children, each of whom has two children. Your beneficiaries are, therefore, your children and, possibly, your grandchildren which the law regards as ‘your issue’. If you live long enough, there’s a chance that you may outlive one of your children. What happens then?

If one of your two children died, your estate distribution would depend on how you referenced their inheritance – as either per stirpes or per capita. That’s critical. If you leave an inheritance to your issue per stirpes, then your children’s children will divide the share their parent would have received had he or she lived. That’s pretty much what most people think will happen – see per stirpes distribution diagram below left.

On the other hand, if you leave the inheritance per capita, then each surviving issue gets an equal share. And that can drastically change how the distribution takes place.

To illustrate this, let’s assume that both your children were due equal shares of your estate. That would send half of your estate to the remaining child, while the other half would be equally divided by the children of the other child- the per stripes distribution.

But under a ‘per capita’ distribution, everyone of your issue gets the same share. So when one of your two children dies, all the remaining issue equally divide the estate. The remaining issue is your surviving child and his two children, along with the two surviving children of your deceased child. That’s five people and each of them gets 1/5th of the estate. That’s quite a significant reduction for your sole surviving child.

*A friendly mistake:

Lastly, if you willed an inheritance to a friend, but he predeceased you, then his wife will receive your bequest. If your intention was that the bequest was only for the friend and not his wife, then you must state in your Will that he must survive you to receive it.

Always understand all what your Will specifically implies and be ready to revise it if there’s a major change in your family structure or in your financial circumstances.

Shane Flait helps you with your financial legal, tax, and retirement goals.
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