There’s nothing like death and money on the table to make people go a little crazy.
A frequent question from clients is who should be their beneficiaries or contingent beneficiaries if there are no kids or grandkids? In this review of a Reddit thread on r/estateplanning, Jeff Marsocci reviews the advice and comments given as well as provides his own experience as an estate planning attorney for more than 26 years.
Who should be my beneficiaries if I don’t have any kids? (From Reddit)
Splitting assets with no children. What’s the norm. My wife and I are finalizing our trust and we need to specify who gets our assets if all of our children were to die with us and there are no remaining heirs. On my side of the family, I have one adult sibling. On her side of the family, she has two adult siblings. I was considering splitting it 50/50 between our two sides (but then my sibling gets 2X the others), or splitting it into thirds between the 3 remaining siblings (but then my side of the family gets half of what the other side gets.) All remaining siblings have kids but are all in very different financial situations. I’ll be gone so I don’t really care, but in order to not cause problems I’d like to go with whatever most people would deem as fair and reasonable.
First of all, always start with the premise – nobody deserves anything. Whatever you want is going to end up being fair because it’s your money.
Now there are some common situations and you’ll see the advice that is being given and you’ll see my advice at the end.
First Advice Given
Well, the good news is that there is no norm.
The bad news is that the lack of a norm often creates a lot of confusion on the part of people planning for their deaths.
Freedom can sometimes be paralyzing, but I encourage you not to be paralyzed by “what would others do?”. When talking about a childless couple free to benefit anyone (rather than the obligation most parents feel to provide for kids), the sky is the limit.
Comment On That Advice
Agree with this. As my experience as an estate planning attorney, there is no norm. As a childless only child married to another only child, we have no idea what we are going to do.
Second Advice Given
You can’t satisfy everybody. If you won a big lottery and decided to share some of it with your families, how would you and your wife split it?
This is something that ends up being a little bit of a sticking point after people pass on. It’s that suddenly everybody knows what you would have done, you would have wanted this and they should be entitled to this and you were promised… This is part of the reason why you are putting it all in writing so there is no confusion afterward and all of this “well I was promised” goes by the wayside. So I just want to put out that there is this attitude of things that pop up and I always tell my clients look, there’s nothing like death and money on the table to make people go a little bit crazy.
Third Advice Given
There isn’t any right or wrong way. You could give it to your respective families per stirpes or leave it to a favorite charity.
Let’s definite that per stirpes. It really is one of the only useful legal Latin terms that we end up using in estate planning as attorneys that counteracts the whole premise of me saying, “Let me speak as the Plain English Attorney and communicate directly with my clients. Per stirpes kind of means down through the bloodlines and what defines is equally at each level.” So if you’re leaving everything to your three kids per stirpes, one of the kids dies but they have two kids. That 1/3 gets split by those two kids. So all of that is encompassed in that per stirpes as well as other contingencies down the line with that. So sometimes we use that term. Leaving it to a favorite charity is pretty common as well if there are no kids involved.
Fourth Advice Given
I know of at least two married couples who are splitting their joint estate in ways between their total adult children (no matter who dies first), so a married couple splitting 3 says among 3 total siblings is probably not far from the norm.
It actually is uncommon the more the siblings are weighted toward one side. “I’ve got 5 siblings on my side but my wife only has one.” Splitting that six ways might end up creating some problems because one side of the family is getting a small fraction of what the other side of the family is. When you have two or three siblings well okay that’s not outrageous. If you had two on one side and three on the other even less so. But when you have a whole bunch of siblings on one side but not on the other, that’s when it can cause issues. But like I said there is no one right answer.
To listen to more comments and Jeff’s responses, please find the entire video here.