An important part of your estate plan is deciding how your assets will be divided after you die. You should first decide who should receive what.

Make a list of those who currently depend on you for financial support. Prioritize your list. Your list will probably include your partner and any minor children you have. Why not leave everything to them? There may be other people to consider. Do you have older parents or other loved ones who are dependent on you for financial support to pay for their housing or medical costs? Do you have children or other relatives who are adults, yet need your support for education costs, support while they launch a new business, or who simply have trouble getting by month-to-month? Are you planning to give money to an adult child for a wedding or a home purchase one day? There is no easy way to decide how to divide assets up if you don't think you have enough assets to go around at the time of your death. Everyone will make this decision differently.

You may be tempted to say that once all these people are provided for, you want to leave the rest to your spouse. However, you may want to take a different approach. Consider leaving certain mementos to a specific child or other close relative or friend. While these items may not have significant monetary value, their sentimental value will mean a lot to someone who is grieving your loss. A collection of books, a piece of art or jewelry or any other asset of yours can help someone remember you long after you're gone. Although this is your decision, be sure to discuss it with your spouse to see if he or she has certain feelings about those specific items.

SUGGESTION: If you leave someone a specific valuable asset, make sure that you also assign them any insurance that you own covering that asset. You may also consider leaving them a little extra to keep up the insurance payments if they will not be able to pay the premiums on their own.

IMPORTANT NOTE: If you have children from a prior marriage, you will need a special plan. If you leave your estate to your surviving spouse, he or she may choose to leave his or her remaining assets at death to his or her own children or to the person to whom he or she remarries. This may eliminate any chance your children have to receive an inheritance. There are special strategies you can follow where all parties are protected. Similarly, do you feel that your spouse will provide for your family (your parents, aunts, and uncles, etc.) after you're gone? If not, you should consider leaving these special people something at your death.

SUGGESTION: If you have minor children, consider leaving additional funds directly for the guardians who may have to care for your children. You will probably be leaving most of your estate to your children, but the guardian may not be allowed to access this money for such things as buying a larger house or car to make both your children and his or her family comfortable with these new living arrangements.

IMPORTANT NOTE: There are very complicated estate and gift tax rules regarding transfers to spouses who are not U.S. citizens. If the value of your estate is more than the applicable exclusion amount, and you are married to a non-U.S. citizen, you'll need to find an attorney who is knowledgeable in this area of estate planning.

In addition to leaving money or property to loved ones at your death, you can use this opportunity to make donations to your favorite charity or other organizations. Remember, your spouse and other survivors may not feel the same way about specific causes or charitable giving in general.

Although you may feel differently, for most people, the following priorities exist for distributing the assets in their estate after their debts and other expenses have been paid:

FIRST—Enough assets go to support the spouse and other dependants for a certain period of time. Remember, children do grow up and spouses can remarry or work.

THEN—With what's left, divide it up based on your feelings and concerns for your:

• Spouse or partner
• Other family members
• Close friends
• Charities

Think twice about making transfers to the following people:

• People who are much older than you who have significant assets of their own—you may be needlessly creating more tax in their estate soon after you die.
• People who are currently on Medicaid or other governmental assistance. The transfer to them will have to be spent on medical or nursing home care that would otherwise be paid by the government. Since these costs are so high, you may not be giving enough to change their situation, but wasting your assets that could go elsewhere.
• People (including your children) who are institutionalized for life. The government will most likely provide them with care, and if you only have limited assets at death, these transfers will take away from your other loved ones who are not having their needs provided for. You can set up certain trusts in which these patients get certain amounts to help out with some extra items without disqualifying them from government assistance.
• People who are about to declare bankruptcy. If someone is so financially distressed, the amount you leave them will be consumed paying debts that would otherwise be discharged in bankruptcy.
• People who cannot control their spending due to such conditions as mental illness, compulsive behaviors such as uncontrollable shopping or gambling, substance abusers, cult members, or people who are unable to control large sums of money. You can always set up the transfer in such a way that someone responsible will control the flow of money to them (See the section Using Trusts to Help Protect Assets).
• Children or other young adults. These younger people may not have a full appreciation of the value of money. You can always give them assets in a trust (See the section Using Trusts to Help Protect Assets).