Question: As a single woman who has never been married and has no children, I would like to leave my assets to close friends when I die. How do I prepare my Will with them in mind?
Loraine’s Answer: Your situation isn’t uncommon. For many people, friends are not only like family; they are family. Many Americans either have no living relatives, or they aren’t close to the relatives they do have, but they may have a “family of choice” comprised of close friends. In the United States, you generally have the right to distribute your assets to whomever you wish, family or not. It just takes careful planning.
When it comes to leaving your estate to friends, a Will or a Revocable Living Trust will allow you to legally specify who gets your assets.
Using a properly prepared Will, you can name any beneficiary you would like to receive an asset, whether it’s cash, money held in accounts, heirlooms, real estate, or other valuables. However, a Will must go through the probate process and can be contested by family members, even those who seem to suddenly appear out of nowhere. If you’re leaving your assets to friends via a Will, it’s important to consult an estate planning attorney to make sure you’ve covered all of your bases and documented your wishes as thoroughly as possible.
As an alternative to using your Will to direct assets, you might also consider:
- Giving assets away while you’re still alive; however, it’s important to be aware of any tax implications, especially if you’re giving away assets other than cash.
- Naming your friends as direct beneficiaries on your financial accounts (i.e., bank accounts, retirement accounts, insurance policies, etc.)
- Directing ownership of assets to your desired beneficiaries through a trust that you set up while you’re still living. Unlike a Will, a trust does not have to go through the probate process in order to become legally binding. It’s also often more difficult to contest a trust than to contest a Will.
Key Estate Planning Takeaway: If you wish to leave your estate to nonfamily members, at a minimum, you need a well-drafted Will that lists your desired beneficiaries and the way you want your assets to pass. However, you should also consider using a Revocable Living Trust and other estate planning tools, to help reduce the risk that a Will contest will disrupt your desired plan and ensure that the plan is carried out as intended, especially if you suspect that there may be disputes over your Will after your death.
This “Q&A with Loraine” blog series features answers from Morgan + DiSalvo Partner Loraine DiSalvo. A key takeaway from each exchange highlights an important facet of estate planning.