Who should inherit your assets?

Rochelle WarriesLatest, Rochelle Writes

A grave stoneWe all want to live forever, so we tend to avoid thinking about what happens after we die. That’s why many individuals don’t have a valid last Will and Testament when they pass away.

Dying without a Will in the eyes of the law means passing away ‘intestate’, e.g. your estate will be divided according to a set formula amongst your surviving spouse, children, parents or siblings. Therefore, having a last Will and Testament in place is non-negotiable. But before approaching a financial advisor or attorney to set it up, you first need to consider who should inherit your assets.

For some the answer is simple: Designating their spouse first and their children second, in equal portions. For others, the answer isn’t so clear. Perhaps their family members have different needs or abilities, or they might not have a partner or children. Perhaps they have charitable goals or wish to provide for a close friend. Whatever the situation, almost any distribution goals are possible with the right planning.

Leaving assets to your spouse

Your marriage contract will determine what is automatically left to the surviving spouse. But do ensure that you nominate secondary beneficiaries on all insurance products in case you both pass away at the same time. Wills and trusts are critical to designate secondary beneficiaries should something unexpected happen to you and your spouse. If you’re divorced, don’t forget to update the beneficiaries on your accounts and life insurance policies to ensure these assets aren’t unintentionally passed along to your ex-spouse.

Leaving assets to your children

It’s natural to love your children equally and to thus designate your wealth equally. However, while this is the least controversial approach, it’s not always correct. An equal distribution may not accurately reflect your family circumstances and there may be reasons to consider giving more to one child over another.

That said, careful consideration should be taken in the instance of unequal distribution. Unless it’s painfully clear from circumstances and motivation, your children can contest your Will and drag out the winding up of the estate.

Some factors to consider in the case of unequal distribution:

  • The child’s financial situation
  • A disabled child who cannot provide for themselves should get a larger portion
  • If one of your children has committed significant time and/or resources caring for you during your lifetime, you may want to honour them with a larger portion of your assets
  • You may wish to leave more assets to biological children than stepchildren, depending on how and when your families were combined. If this isn’t explicitly stated in your Will, the court will distribute assets equally.

Unmarried and no children: What happens if you die intestate?

Many unmarried and childless individuals simply don’t see the need for a Will. There are real consequences to this – consider the following scenarios:

  • If both your parents are still alive, they will receive your estate in equal parts
  • If you only have one living parent, that parent will receive 50%. The other 50% goes to the descendants of the deceased parent. This can be your siblings, half-siblings, or step-siblings (even ones you didn’t knew exists will inherit a portion of your assets
  • If both parents have passed away, the descendants of both your parents will inherit your assets. Again, this can be your siblings, half-siblings, or step siblings.
  • If you have no parents and no siblings of any form, your wealth will go to your nearest relative – in the blood degree closest to you. If your mom/dad has a sibling or parent still alive, chances are they will inherit your entire estate. Your estate is also not divided up – the closest blood relative gets the whole estate. So, if you have cousins and want them to inherit, you must draw up a Will specifying your wishes, as their parents (i.e. your aunts and uncles) will always supersede them.

Leaving assets to charity

If you have a cause close to your heart and want to leave it a portion of your money, you can do it in one of two ways:

  • Simply state the amount in your Will. If you want the money to be used for a very specific purpose, you need to write it down clearly. Your financial advisor can assist.
  • Nominate the charity of your choice as a beneficiary on one of your accounts, like a life insurance policy or a retirement account.

Always communicate your wishes and discuss your Will with loved ones while you’re alive. This will prevent animosity and resentment between family members after you’re gone. Also, review your Will if your circumstances have changed – what was applicable five or ten years ago might not be applicable today.


Rochelle Warries is a qualified chartered accountant with 16 years of experience and a seasoned stock market investor. Her passion is helping novice investors build healthy investment portfolios through financial education.

She is founder of Soul Financial, a website offering financial education and coaching. You can find her on Twitter: @soulfairy3