Planning your bequests around specific assets, specifically assets that avoid probate by transferring on death, can present dilemmas both during your life and for your beneficiaries after your passing. A better alternative would be to create an estate plan that gives you flexibility to cover unexpected expenses later in life while preserving your ability to provide for your beneficiaries.
The problem with basing your estate plan around giving specific assets to specific people is that what you have now is just a momentary snapshot in time. The value of assets could change significantly between now and the time of your passing. Real estate, financial markets, and gold prices have all seen significant volatility in recent years. What seems like an equitable division of assets now might not seem as equitable in the future. Hard feelings may result among your beneficiaries if some turn out to have been luckier than others in terms of what specific assets they inherit.
Significant unexpected expenses can also wreck plan based around specific bequests. While you may think you have enough other liquid assets to cover your expenses, an unexpected change in your circumstances could drain part of your savings. You could have to sell certain assets in order to cover your own expenses. If one of those assets was a specific bequest that transferred on death, then you’ve just disinherited the beneficiary of that specific asset.
The solution to the problem of specific asset bequests is to create an estate plan based on dividing your estate into fractional shares. You can then give each beneficiary whatever share of your estate as you wish while removing the volatility of market shifts. You also get the flexibility to manage your assets in your lifetime without having to worry about inadvertently disinheriting one or more of your beneficiaries. As a result, the brunt of any unexpected expense gets minimally borne by all your beneficiaries instead of disproportionately affecting a single beneficiary. Please consult with an elder law expert to develop a plan that provides flexibility for your estate.
