One of the fundamental steps of setting up an estate plan is deciding whom to name as the beneficiaries. Though your first thought may be to leave everything to your spouse or children, there are a few things to consider.
It is true that beneficiaries tend to be close relatives like spouses and children, but it is up to you to decide. Perhaps there is a close friend you would like to remember in your will, or a favorite charity. There may also be tax reasons to give to more than one beneficiary.
A trust may be an option, especially if the intended beneficiaries are under 18 or heavily in debt. The trust can put some controls over how and when funds are distributed. Establishing a trust requires naming a trustee, who will administer the trust after you are gone.
An estate plan need not be static. As your intended beneficiaries age, some may have little need for a large inheritance, while others may experience financial reversals. Certainly, few would be happy to have a former spouse receive a portion of their estate, while their current husband or wife is excluded, because they forgot to update their estate plan.
These are some of the considerations that are part of developing an estate plan. This is a highly personal process at times, but there are also legal and financial factors to consider. An estate planning attorney can help advise you on whom to designate as your beneficiaries, so that your wishes are carried out.