By now, all of our California readers know that we believe that having a proper estate plan is vital. Some people might think that an estate plan only covers what you want to give out to your family members; however, that is only part of what you should think about. For some people, giving to a favorite charity or similar organization is included in the estate plan.
There are several options you have when you want to leave things for your family members or others. One option you have is that you can pay tuition for someone directly. By doing this, you can avoid some taxes that can take away from the amount your beneficiary receives. This also gives that person the benefit of knowing that they won't have to take out loans to pay for an education.
You can also pay for someone's medical expenses in the same way. For both medical payments or education tuition, only the actual amount of bills or tuition can be covered. You can't give extra money for room and board.
As far as the beneficiaries go, you can choose to leave items or money to your spouse, your children or grandchildren, other family members, friends or charities. No matter who you decide to leave part of your estate to, it is vital that you look into the available methods to determine which is best for your needs. Knowing these options and understanding the pros and cons of each can help you to ensure that your loved one gets exactly what you want to leave to them.
Source: Fidelity, "Estate Planning Strategies by Beneficiary" Nov. 26, 2014