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Considerations before choosing heirs

For many New York residents, estate planning may call to mind the consideration of a variety of different scenarios in order to determine the most attractive way to maximize distributions to heirs. The selection of those beneficiaries and the portion of wealth received by each may be less objective and more subjective.

Many people consider how much they want to leave to charitable organizations and which ones they want to enrich. They also consider family and friends. How much to leave to charities versus how much to leave to persons may be one of the first hurdles to jump.

After an amount is established for individuals, determining who gets how much is the next step. Sometimes the owner of an estate may decide not to distribute to heirs evenly but may decide to give funds based on good behavior, hard work or need. Some wealth holders may be apprehensive that an heir is not prepared to handle a large amount of money or that an heir could be demotivated when too much money is placed at his or her disposal. Whatever the logic used to make the allocation, the most difficult step could be communicating to the future beneficiaries in advance how the wealth will be distributed.

Planning the sharing of an estate may entail a lot of paperwork, calculations and decisions. Many people choose to include input from an attorney when they are planning the disposition of their assets. An attorney may be able to help ensure that the estate planning documents comply with laws of the state of residence and that they are accurate and properly prepared. The attorney can also suggest when it is appropriate to establish trusts rather than giving cash or other assets directly to a beneficiary.

Source: Forbes, "Estate Planning 101: Picking Your Heirs", Larry Light, September 24, 2014

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