Your estate plan should reflect your wishes. However, you must consider how to tailor your plans to fit the needs and capabilities of the people in your life.
For instance, even the best-laid plans can be thwarted if complicated relationships or individuals are likely to challenge your wishes or squander a gift. Under these circumstances, it can be wise to take some precautions and utilize specific tools to protect your legacy.
Types of people to plan around
- Addicts: People with addictions to drugs, alcohol or gambling can be tricky to include in an estate plan. You likely worry that they will sell property or blow through an inheritance to support their habit, but you may not want to completely cut them out of your life. In these situations, you might consider options like a trust. As this article notes, a trust allows you to retain control of when the beneficiary receives payouts and put specific provisions in place.
- Financially irresponsible: Someone who is young or inexperienced with money often benefits from having restrictions on inheritances. Again, a trust can be a valuable tool here. It can also be prudent to talk to your loved one ahead of time and help them prepare to receive a windfall of money.
- In unstable relationships: You may trust your loved one and want them to enjoy the benefits of a financial gift. However, if they are in shaky marriages or have toxic friendships, there is a risk that someone else could ultimately profit from your legacy. Thus, it can be wise to leave gifts specifically to your child or another recipient.
- Estranged from the family: If your sibling, child or parent is estranged, including them in your plan can be tricky. If you want to exclude them, say so directly and clearly so there is no confusion. If you want to ensure that person receives a gift without others attempting to challenge it, you might consider no-contest clauses in your will.
Your estate plan is as much about your loved ones as it is about you. When there are complicated relationships or people in your life, getting help to create an appropriate plan can be critical.