How inheritance plans balance competing family interests

Lifetime gifts when someone dies without a complete will

In Minnesota, for example, when someone dies wholly or partly intestate, a lifetime gift counts against the recipient's intestate share only with specified written documentation, and the recipient must be an heir at death. Other states differ.

The decedent's contemporaneous writing or the heir's written acknowledgment must identify the gift as an advancement or indicate that it enters the division and distribution of the intestate estate.

Value the advancement when the heir first obtained possession or enjoyment, or at the decedent's death, whichever occurred first.

If the recipient does not survive the decedent, disregard the gift unless the decedent's contemporaneous writing provides otherwise.

This rule concerns intestate inheritance. It does not establish how gifts affect a will or trust.

Lifetime gifts that satisfy a gift under a will

In Minnesota, for example, a lifetime gift satisfies a gift under a will wholly or partly only if at least one of three alternative routes applies. Other states differ.

• The will provides for deduction of the lifetime gift.
• The testator's contemporaneous writing states that the gift satisfies the will gift or that its value is to be deducted from the will gift's value.
• The devisee acknowledges in writing that the gift satisfies the will gift or that its value is to be deducted from the will gift's value.

These are alternatives. The will provision does not also require one of the writings listed in the other routes.

For partial satisfaction, value the lifetime gift when the devisee first obtained possession or enjoyment, or at the testator's death, whichever occurred first.

If the devisee does not survive the testator, satisfaction still applies when applying the statutory substitute gift and failed devise provisions, unless the testator's contemporaneous writing provides otherwise.

This will rule does not establish treatment of trust gifts.

Trust administration and beneficiaries' respective interests

In Minnesota, for example, a trustee administering a trust with two or more beneficiaries must act impartially, giving due regard to their respective interests. Other states differ.

A family's assessment of fairness is a separate discussion topic. For more on family relationships and proposed fiduciary responsibilities, open the fiduciary roles guide below.

Marriage after signing a will

In Minnesota, for example, a spouse who marries the testator after the will is made and survives the testator receives an intestate equivalent share unless one of four exceptions applies. Other states differ.

• A prenuptial or postnuptial agreement provides for the spouse or includes the spouse's waiver.
• The will or other written evidence discloses an intention not to provide for the spouse.
• The surviving spouse is designated as a devisee or as the beneficiary of a trust referenced in the will.
• An outside transfer provides for the spouse instead of a testamentary provision, with that intent shown by the testator's written statements or reasonably inferred from the transfer's amount or other evidence.

To satisfy that share, other devises abate before devises to the testator's children born before the marriage who are not the surviving spouse's children, and specified substitute gifts to those children's descendants.

This protection concerns marriage after making a will. It is distinct from the elective share.

Separate lists for particular belongings

In Minnesota, for example, a will may reference a separate writing assigning eligible tangible personal property that the will does not otherwise specifically dispose of. Other states differ.

The will must reference the writing. The writing must be handwritten by the testator or signed by the testator, and it must identify the items and recipients with reasonable certainty.

Money, coin collections and property used in trade or business are excluded.

The writing may precede or follow execution of the will, and the testator may alter it afterward. If writings assign the same item to different people, the most recent writing controls.

Two related terms

Equitable inheritance: The family's assessment of fairness in light of circumstances and objectives. It is not a statutory distribution formula.

Family governance: The family's proposed procedures for discussing shared wealth, responsibilities and decisions. The label alone establishes no trustee power, ownership transfer or binding agreement.

Four EstatePlanner.com resources to explore next

• How family relationships affect fiduciary roles. Read this when your inheritance discussion also includes who might serve as trustee or take another responsibility. It focuses on family relationships and fiduciary roles.
• How heirs learn to manage wealth and ownership. Choose this guide when a family member's preparation is part of your fairness discussion. It covers heir education and preparation for wealth and ownership.

An Investor Advantage perspective

This speaker describes one family's possible priorities for financial support, a perspective to consider when discussing your own objectives.

"Other families, they want to do things like create a family bank and say, we'll give you money for education, for a medical emergency. Maybe your first house there. In that the only way you get money from the family is applying to the elders."

Common questions