Who Gets the Money if You Don't Want to Give It to Family?

 By Saghir Aslam
Rawalpindi, Pakistan

(The following information is provided solely to educate the Muslim community about investing and financial planning. It is hoped that the ummah will benefit from this effort through greater financial empowerment, enabling the community to live securely with dignity and fulfill their religious and moral obligations towards charitable activities)

If you're considering leaving your assets to a person or organization outside your family, consider these planning tips to help avoid conflict.

One of the biggest decisions regarding estate planning is how to divide your assets who gets what? The choices you make today can greatly impact the legacy you leave, which is why it's important to weigh your goals and concerns. You also have lots of options. Individuals have the freedom to choose who does or doesn't receive an inheritance.

You can do pretty much whatever you want with your estate, as long as it doesn't go against the law. There may be very specific reasons why you choose one path over another. Whatever you choose, communicating the reasons why is key.

Some clients ponder how much is enough and decide to leave the exemption amount (currently $12,920,000 per person, $25,840,000 for a married couple) to family and/or charity. I work with friends to help them define their charitable vision and goals, create an intentional giving plan, and select an appropriate philanthropic vehicle a donor-advised fund, private foundation, or charitable trust through which to accomplish their goals.

Explore more of the reasons you might choose alternative options for your assets in your estate. 

Considerations for family inheritance

While some people prefer to direct their assets to a descendant, there are situations like the ones below that may warrant an alternative approach.

• For children with special needs: If your child receives Social Security Disability Insurance (SSDI) income, they could potentially lose that benefit if they receive an inheritance outright.

• What to consider: "It is common to use a special needs trust to provide for a special needs child, giving the trustee complete discretion over distributions, to avoid disqualification from public assistance,". When planned this way, the person with special needs could continue receiving public benefits but with the added benefit of supplemental income from the trust. That beneficiary designations should be coordinated with special needs trust planning.

• Addictions: Parents may be concerned about leaving money or assets to a child who is battling an addiction, like drugs or gambling. They may be concerned the child might use the inheritance to fuel their addiction. What to consider: While you do have the option to disinherit, another option may be to create a trust and name a responsible relative, friend, or professional to distribute at their discretion. You could set parameters for these distributions, such as adding a drug testing requirement. This would allow the child to receive benefits while also incentivizing a healthier and more responsible lifestyle.

To be continued.

(Saghir A. Aslam only explains strategies and formulas that he has been using. He is merely providing information, and NO ADVICE is given. Mr Aslam does not endorse or recommend any broker, brokerage firm, or any investment at all, or does he suggest that anyone would earn a profit when or if they purchase stocks, bonds or any other investments. All stocks or investment vehicles mentioned are for illustrative purposes only. Mr Aslam is not an attorney, accountant, real estate broker, stockbroker, investment advisor, or certified financial planner. Mr Aslam does not have anything for sale.)