A former University of New Hampshire librarian’s $4 million gift to the school has gotten a lot of notice recently because of the way the school chose to use the funds. All the attention serves as a nice reminder that estate planning is important, especially if you’re particular about the way you want your money used.
Robert Morin, who worked at the university’s Dimond Library for almost 50 years, gave his entire estate to the school when he died in 2015. Morin designated that $100,000 go to the library, but he did not specify how the remaining money be spent, according to a statement by UNH.
The school said earlier this month, according to numerous reports, that it plans to spend $2.5 million of the proceeds on a student career center, and another $1 million on a video scoreboard for the school’s football stadium. That final choice upset some folks, who aired their frustration on social media.
The opponents said using 10 times the amount dedicated to the library for a scoreboard goes against Morin’s interests, and particularly his austere lifestyle, which is what allowed him to save up such a large sum of money.
But if Morin had wanted his generous contribution used in a particular way, wouldn’t he have just dictated that in his will or trust, as he did with the amount designated to the library?
Most likely so, which got us thinking about just how much flexibility we all have in dictating our wishes when it comes to leaving money to family, friends and even organizations and charities.
Brad Wiewel, a Credit.com contributor and board-certified Texas estate planning attorney at The Wiewel Law Firm, said a person’s will or living trust can basically dictate anything “that’s not illegal, kind of to use a phrase, unholy.”
“You can put in there pretty much anything you want to,” Wiewel said. “This guy could give it to anything, like a campaign that is anti-smoking, but I don’t know that they would let him say, ‘I want to give this to encourage smoking. That might be against public policy.”
Same holds true for known terrorist groups, hate groups, and so on, Wiewel explained.
Some things you should keep in mind when determining who will receive proceeds from your estate and how much they will receive include:
Stating Specific Amounts
Be careful when stating specific dollar amounts in your will or trust, Wiewel said, especially when combining charities and family as beneficiaries. Your estate can lose value over time, so that $100,000 you want to leave to the Boy Scouts can be great when your estate is valued at $1 million, but if it drops to just $150,000, your family will be left with very little.
That’s why it’s a good idea when leaving part of your estate to a charity or other entity to use a percentage of the estate instead of a specific dollar amount. Along with that, Wiewel recommends a caveat that the amount is not to exceed a certain dollar amount.
That’s not only because stating a particular percentage could hurt other beneficiaries, but a charity, for example, could be required to do an audit of the estate to determine they received the full percentage dictated, which can become costly and time-consuming.
“It’s easier to say, ‘We don’t want to go through an audit, we’re going to give you $100,000 because this is the lesser of; here you go, have a good day,’ ” Wiewel said.
Name Charities as Beneficiaries Instead
Instead of mixing charities and family members in your will, consider making a charity a beneficiary of a retirement account instead. That way, the money will go to them tax-free, Wiewel explained, and, should you wish to change which charity receives your donation, you can simply change the beneficiary on your IRA or 401K account instead of having to rewrite your will.
As with most estate-planning issues, it’s a good idea to seek the counsel of a professional rather than attempting to do it yourself, particularly if you have substantial assets and/or multiple beneficiaries. And as you look at getting your estate in order, it’s also a good idea to ensure your loved ones don’t have to deal with identity thieves who’ve opened credit accounts in your name without your knowledge. You can keep track of these things by regularly checking your credit reports, which you can get for free every year at AnnualCreditReport.com, and by closely watching your credit scores, a drastic change in which can be the first sign that you’ve been a victim of identity theft. You can get your two free credit scores, updated every 30 days, on Credit.com.
Image: Edward Bock