A recent caller to The Ramsey Show found herself struggling with a question that many people face: who should inherit your assets if you pass away?
The 31-year-old explained that she’s single, has no children, and recently lost her mother. Her father is still living, and she has several siblings, including one with a learning disability. Despite having modest assets, she worried that leaving her estate to a close friend instead of family could spark conflict. (1)
Her fear is that if she chose someone outside her family, her siblings might object, claiming that “family comes first.” The conversation not only highlighted the guidance they gave her, but also raised broader questions about how to choose an estate beneficiary, what these designations mean, and how to reduce family disputes over inheritance.
Must Read
- Thanks to Jeff Bezos, you can now become a landlord for as little as $100 — and no, you don’t have to deal with tenants or fix freezers. Here’s how
- I’m 49 years old and have nothing saved for retirement — what should I do? Don’t panic. Here are 6 of the easiest ways you can catch up (and fast)
- Dave Ramsey warns nearly 50% of Americans are making 1 big Social Security mistake — here’s what it is and 3 simple steps to fix it ASAP
Ramsey’s advice for estate planning while young
The show’s hosts pointed out that she may be worrying more than she needs to—Dr. John even zeros in on her stress by asking if she has anxiety, which she confirms. Then, he delivers some blunt advice:
"You’re 31 years old. Statistically, you’re not even close to halfway done with your life yet. You’ve got a long way to go. And so, if you’re like most Americans, you’ve got enough to worry about just day in and day out. I would not put this on my list of things I need to worry about today." Dr. John tells her.
Then, they move on to her actual assets. Since no one relies on her income, they suggested canceling her $500,000 life insurance policy. She’s spending money to leave a nest egg to someone that doesn’t rely on her income.
They also explained that her current approach to bank accounts and her car title, where her father is listed as a co-owner, isn’t ideal because it gives him access to her accounts while she’s still alive. Instead, they recommend using a payable on death (POD) designation, which allows assets to transfer directly to the person she names, without the complications of joint ownership or dealing with probate. (2)
Most importantly, they reminded her that she can leave her assets to anyone she chooses. Whether it’s a close friend, a charity, or even simply directing her car to be donated, her family doesn’t get a vote after she’s gone. While this can be challenging advice for someone with complex family dynamics, the blunt delivery helps make it clear to the caller that she’s in charge.
If you’re facing a similar challenge, here is what you need to know.
Read more: This is how much US drivers saved on car insurance when they switched providers, according to a new Consumer Reports survey of 140,000 policyholders
What is an estate beneficiary, and how to choose one
An estate beneficiary is the person or organization you choose to receive some or all of your assets after you die. These designations often apply to assets like your home, bank account, investment account and life insurance policies. (3)
You can name a primary beneficiary, who receives the asset first, and a contingent beneficiary, who inherits if the primary person can’t. Typically, your beneficiaries are listed in your will or directly on your financial accounts.
It’s also worth noting that heirs and estate beneficiaries aren’t the same, although they’re often used interchangeably. An heir is someone legally entitled to inherit by law — often a spouse or children — but only if there isn’t a will. An estate beneficiary is the person you choose while you’re alive to receive specific assets.
Choosing an estate beneficiary is a personal decision. Your choice might be a family member, a trusted friend, a charity or even a cause you want to support. The point is that you can direct your assets in whatever way best reflects your values and relationships. When choosing, think about:
- Trustworthiness: Will this person manage your assets responsibly?
- Practicality: Does this individual (or organization) have the ability to handle what you’re leaving behind?
- Intentions: Do you want your legacy to support family, friends, or a cause you care about?
The caller was worried about family disputes when it came to passing on her assets, and with good reason. Without clear estate planning, families often clash: in one survey, 58 % of respondents said they experienced family disputes and had assets fall under court control when a will or estate plan was not properly established. Many heirs feel entitled, expect “family comes first,” or may feel blindsided and resentful when excluded.
But remember: your estate plan is ultimately your decision and you don’t have to explain your thoughts to anyone. Whether you leave your car to a charity, your savings to a friend or a small gift to a sibling, the important thing is to make your wishes clear in writing so they’re honored later without unnecessary conflict.
What to read next
- How much cash do you plan to keep on hand after you retire? Here are 3 of the biggest reasons you’ll need a substantial stash of savings in retirement
- There’s still a 35% chance of a recession hitting the American economy this year — protect your retirement savings with these 5 essential money moves ASAP
- This tiny hot Costco item has skyrocketed 74% in price in under 2 years — but now the retail giant is restricting purchase. Here’s how to buy the coveted asset in bulk
- Want an extra $1,300,000 when you retire? Dave Ramsey says this 7-step plan ‘works every single time’ to kill debt, get rich in America — and that ‘anyone’ can do it
Join 200,000+ readers and get Moneywise’s best stories and exclusive interviews first — clear insights curated and delivered weekly. Subscribe now.
Article sources
We rely only on vetted sources and credible third-party reporting. For details, see our editorial ethics and guidelines.
The Ramsey Show (1); ACTEC (2); Georgia Probat Form (3)
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.