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Wednesday, October 20, 2010

Why does it matter who gets my assets after I die?

Today a reader asked "why does it matter who gets my assets after I die?" What a great question. If you don't mind that your spouse and kids have to fight for a share, that the government may take a nice chunk of your money in tax, and that the lawyers may make more on the estate disputes than your family does, then I guess it doesn't matter to you who gets your assets. I know though, that most people do agree that it matters.

One good reason that it matters is that you're legally obligated to support certain people with your assets, if you have any when you pass away. Those people are your spouse, minor children, and any children who have a handicap that prevents them from earning a living. You may not care what your legal obligations are once you've passed on. After all, you'll be gone. But you should know that if you don't make provision for the people I've named here, you'll probably be handing them a nasty lawsuit to deal with. Some portion of the assets you worked for your whole life will be eaten up in legal fees. And if you leave your family members in that situation, they may not remember you quite as fondly as they otherwise might do.

Another good reason that it matters it that most people do not share the "what does it matter" attitude about money. Most people would prefer to be the one getting the assets than the person not getting the assets. Poorly planned estates are famous for being the subject of bitter family arguments. You probably don't want your kids fighting and your family breaking up over money.

Maybe you agree that the government can dictate who gets your estate after you die. Maybe you want it to be your choice and not the government's choice.

Perhaps it matters to you that people who were kind to you or charities that helped you would really appreciate receiving a thank you gift from your estate. Particularly if the alternate choice is an extended family member that you didn't really have a relationship with.

The reasons that estate planning matters to individuals vary from person to person, depending on a person's situation and priorities.

3 comments:

  1. What would happen to the residue beneficiary's share of an estate if the residue beneficiary were to die died 120 days AFTER the testator, but before the executor distributes the assets? Everything has been converted to cash and the is money is in a bank account. No liabilities.

    The testors will states that the residue beneficiary must survive the testator for 30 days ; provided that should any beneficiary then be dead, leaving children alive, such children will take in equal shares the share of deceased beneficiary.

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  2. In this case, the executor would follow the Will. It states that if someone survives by 30 days, they get their share, and you've stated that this beneficiary did survive by 30 days. The executor will pay it to that beneficiary's estate. At that point, deciding who gets it is up to a different person - that being the executor of the deceased beneficiary's estate. Hopefully he or she left a Will. Otherwise it will be paid to the people who are described in you province's intestacy laws.

    Lynne

    ReplyDelete
  3. Thank you very much for your response. This is the clarification I was looking for. Yes, the beneficiary does have recent will.

    ReplyDelete

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