Estate Planning? Four Strategies for Leaving Assets to Your Heirs
No family is exactly like another, so here are some considerations to help you decide which distribution strategy best suits your situation, values and goals.
- (opens in new tab)
- (opens in new tab)
- (opens in new tab)
- Newsletter sign up Newsletter

When reviewing your estate plan, how you distribute your assets to your beneficiaries isn’t always a simple decision. In addition to determining how to best divide assets among heirs, you must also think about how and when the beneficiaries can access their inheritance and then ensure that these provisions are outlined clearly in your estate planning documents.
With estate planning, every situation is unique, and what works well for one family might not work for another. While there is no right or wrong way to distribute an estate, there are a few considerations to keep in mind to help determine which strategy aligns best with your circumstances, values and goals.

Strategy #1: Leaving Assets Outright.
The most straightforward option when distributing an estate is to pass wealth to heirs outright, with no restrictions on how they access their inheritance. While this approach is often the simplest, it could have some drawbacks.
For example, for families of significant wealth, estate heirs may be encouraged to live off their inheritance rather than produce their own income. Potential outside risks must also be considered when there are no restrictions on accessing an inheritance, such as an heir getting a divorce.
While some families may be comfortable with this approach, it is generally discouraged when distributing significant wealth to younger family members or those who do not have experience managing large sums of money.

Strategy #2: Distributing Assets in Stages.
Distributing assets to heirs in stages allows them to manage their wealth without putting all their inheritance at risk at once. Families keep wealth in a trust and can choose how they want to distribute it. One example is to pay a percentage of the trust to the beneficiary when they reach a certain age, such as 10% when they turn 30, 20% when they turn 35 and so on.
Another option is to award the beneficiary when they achieve a certain goal, such as reaching an educational milestone.

Strategy #3: Leaving Assets in a Discretionary Lifetime Trust.
A more secure option is to leave assets in a discretionary lifetime trust, which would maintain the assets in a trust for the entire lifetime of the heirs. This approach offers the highest level of protection from outside risks such as divorces, lawsuits and poor money management.
Additionally, leaving assets in a lifetime trust allows a family to create a lasting legacy for future generations. While the beneficiaries must rely on the trustee’s discretion to make distributions, there is the opportunity to include specific instructions for the trustee, such as providing money to make a down payment on a home or to support a business venture.

Strategy #4: Combining Distribution Strategies.
A family may find that a combination of the above scenarios works best for them, where beneficiaries receive a certain amount or percentage of their inheritance upfront and leave the balance in trust in perpetuity. This approach allows heirs full access to a certain amount of money to support their lifestyle while pursuing their own ambitions without being wholly reliant on the trust.
Assessing Your Estate Plan
How you distribute your estate is an intentional process, determined by your personal and family situation.
Carefully considering and documenting which distribution strategy makes the most sense for you and your family is important, as it will have a lasting impact.
--
This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA (opens in new tab).
As a Senior Wealth Adviser at The Colony Group (opens in new tab), Indrika Arnold provides clients with financial planning services while helping the firm develop and refine Family Office services. She is a financial professional with 15 years of experience. Indrika serves ultra-high net worth individuals and families, and she focuses on all areas of planning. She has a particular interest in helping to prepare the next generation to be responsible stewards of their inherited wealth.
-
-
Is Retirement in 2023 Still Possible?
Yes, it is, if you have a customized plan specific to your retirement. If you do, you’re in the minority, though, so here are some ways to develop that plan.
By Nicholas J. Toman, CFP® • Published
-
Top Money Market Accounts 2023
Money market accounts are interest-bearing accounts at a bank or credit union, typically paying high interest rates. Here are the best right now.
By Erin Bendig • Published
-
Is Retirement in 2023 Still Possible?
Yes, it is, if you have a customized plan specific to your retirement. If you do, you’re in the minority, though, so here are some ways to develop that plan.
By Nicholas J. Toman, CFP® • Published
-
Being Rich vs. Being Wealthy: What’s the Difference?
It’s all about where you put the zeros — having a large bank account isn’t the same as having zero regrets and focusing on what brings you joy.
By Andrew Rosen, CFP®, CEP • Published
-
I Wish I May, I Wish I Might: Estate Planning’s Gentle Nudge
Contrary to what you might expect, using precatory language such as ‘I wish’ or ‘I hope’ can play an important part in three estate planning objectives.
By Allison L. Lee, Esq. • Published
-
Donor-Advised Funds: A Tax-Savvy Way to Rebalance Your Portfolio
Long-term investors who embrace charitable giving can easily save on capital gains taxes by donating shares when it’s time to get their portfolio back in balance.
By Adam Nash • Published
-
Five Investment Strategies to Focus on in 2023
Planning instead of predicting, reducing allocations of illiquid assets and having a diversified portfolio are good ways for investors to play defense this year.
By Don Calcagni, CFP® • Published
-
Investors Nearing Retirement Show Patience With Markets
Despite last year’s upheaval, many investors are sticking with long-term plans and tightening their budgets instead of moving money out of stocks and bonds.
By Matthew Sommer, Ph.D. CFA® • Published
-
Long-Term Care Planning vs. Taxes: Finding a Healthy Balance
Many families discover that trying to mitigate the cost of long-term care can conflict with another common retirement concern — reducing taxes for retirees and their heirs.
By John M. Graves, Esq., IAR, Agent • Published
-
For a Concentrated Stock Position, Ask Your Adviser This
There can be advantages to having a lot of stock in one company, but ‘de-risking’ can help avoid some significant disadvantages.
By Robert Gorman • Published