Whether you’re single with no children, are part of a blended family, or wish to leave a legacy to friends, caregivers, or charitable causes, planning for extended or non-family beneficiaries requires thoughtful strategy and a clear understanding of the tools available.
“Even when children are in the picture, a spouse is often the primary beneficiary of many trusts and estates,” said Bob Petix, private wealth strategist for Wealth & Investment Management, Wells Fargo Clearing Services, LLC. “Because of this, many people, particularly those who are in a second or third marriage, look to establish marital trusts, which not only offer tax advantages but asset protection — especially in the event of a remarriage.”
As an example, Petix shared that a Qualified Terminable Interest Property (QTIP) Trust can help provide income to a surviving spouse while preserving control over where the remaining assets go after their death, helping to prevent unintended transfers to a new spouse or their family.
Some individuals may wish to extend their legacy to grandchildren or even great-grandchildren. The Generation-Skipping Transfer (GST) tax exemption allows assets to pass tax-free to beneficiaries two or more generations below the grantor.
“This can be especially powerful when combined with lifetime gifting strategies and trust structures that span multiple generations,” said Petix.
Single individuals often choose to leave assets to “collateral heirs” such as siblings, nieces, or nephews — or even to non-family members like business partners or caregivers. While the same estate and gift tax rules apply, certain techniques — such as Grantor Retained Income Trusts (GRITs) — can help transfer wealth efficiently to some of these beneficiaries.
In these cases, it is especially important to plan for contingencies. “Unlike traditional family structures where assets might naturally flow to children or grandchildren, planning for non-lineal beneficiaries may require explicit direction on how property is to pass to avoid unintended consequences,” Petix noted.
If a non-lineal beneficiary predeceases the grantor, the trust should address where the assets will pass next.
“The grantor may not want the assets to go to the next generation of the non-lineal beneficiary,” said Petix. “In this case, they can design their plan to redirect the remaining assets to charities, other individuals, or even back to the original beneficiaries of the estate.”
Petix also highlighted a growing trend of purpose-driven giving among collateral heirs — for example, funding education or medical expenses. Gifts can be structured to cover tuition or health care costs using the annual exclusion or direct payments to institutions, which do not count against lifetime gift tax exemptions.
Charitable giving is another meaningful way to leave a legacy. Vehicles like Charitable Remainder Trusts (CRTs) or Charitable Lead Trusts (CLTs) allow individuals to support causes they care about while also potentially receiving tax benefits.
A CRT allows you to provide income to an individual, who can be outside of the family (or yourself), for life or a term of years, with the remainder going to a charity. This structure offers income tax benefits and can be a powerful tool for philanthropically minded individuals who also want to support a trusted friend or partner during their lifetime.
The inverse of a CRT, a CLT provides income to a charity for a set term, after which the remaining assets pass to one or more beneficiaries, who can be non-family. This can be a strategic way to help reduce taxes while supporting both charitable and personal goals.
Ultimately, estate planning — whether for family or non-family members — is about aligning your legacy with your values. The tools and strategies available today make it possible to support the people and causes that matter most to you, even if they fall outside traditional inheritance paths.
“Whether you’re supporting a lifelong friend, a devoted caregiver, or a cause close to your heart, the tools are available — but the planning must be intentional,” said Petix.
In all cases, working with a team of experienced professionals — estate planning attorneys, tax advisors, and financial advisors — is essential. Their guidance helps ensure your estate plan is not only legally sound but also thoughtfully designed to address potential lapses, tax implications, and the unique needs of your chosen beneficiaries.
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Wells Fargo & Company and its affiliates do not provide tax or legal advice. This communication cannot be relied upon to avoid tax penalties. Please consult your tax and legal advisors to determine how this information may apply to your own situation. Whether any planned tax result is realized by you depends on the specific facts of your own situation at the time your tax return is filed.
Wells Fargo Trust is a part of WIM and offers services through Wells Fargo Bank, N.A. and Wells Fargo Delaware Trust Company, N.A.
