per stirpes (Latin for “by branch,” meaning each branch of the family would receive a share). If one of my two beneficiaries dies, where does the money go? Is it the other one, or is it the family of the one who died? I could disinherit grandchildren by picking the first option and leave everything to the other beneficiary and their family! This is known as per capita (Latin for “by heads,” meaning per person) vs. Not planning for the death of a beneficiary. Single? In an Emergency, Who Is Safeguarding Your Money? 6. Who will handle the money for them? Define “for their benefit.” Does a new Escalade count, because the kids won’t fit in my Honda Civic? That phrase welcomes a whole host of potentially abusive interpretations. Leaving assets directly to a minor without dealing with guardianship issues. When the house was ultimately sold, the heirs lost over $500,000 in addition to the legal fees. Worse, during this time period the home’s value declined dramatically. The third, however, several years before her mother’s death, moved to San Diego (2,500 miles away!) and didn’t WANT to own a house in that town.īecause of the way the will was written, the heirs had to go through a lengthy process with the courts to finally get permission to sell their mother’s home.
Two of the three children did, in fact, live in that same town. Her will had stated that her children couldn’t sell her house unless everyone had a house in that particular shore town. Not thinking through a well-intended gift.Ī client had three daughters and wanted to make sure after she passed away that they always had a home to go to in the town where she lived. This used up virtually all of the assets of the estate, and the remaining beneficiaries got very few assets. His estate would have to go buy those shares and give them to the grandchild. The problem was that the will was written 30 years earlier, and the same number of shares was worth $600,000 at his death, AND he didn’t own them anymore. We had a client who once left shares of a particular stock, which at the time was worth $10,000, to a grandchild. His estate might be required to go out and purchase it at a much higher price, which could hurt all of his other beneficiaries. Specific bequests are handled first, and the person who died might not even own that investment anymore. Naming specific investments in your will. If I “buy” it for $1 and sell it for $1 million, I pay tax on the $999,999 gain! 3. Why is this so bad? Because if I inherit a property worth $1 million and sell it for $1 million I may pay no tax.
Today those lots would sell for $2 million each. For example, when my grandfather moved to Avalon, N.J., he paid $50 a lot for property. This was popular years ago in areas that saw very rapid land appreciation.
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