INCLUDING BEQUESTS IN YOUR ESTATE PLAN
Many people are unaware that they can do just about anything they want when they are creating distribution provisions in their estate planning. One example of a good way to “share the wealth” is the use of bequests. Bequests are the act of giving something to a beneficiary in either your will or your trust.
There are different types of bequests. A general bequest is a gift paid out of the general assets of an estate, which is typically a stated sum of money. An example: “I hereby give $5,000 to my friend Frank.”
A specific bequest is a gift of a specific item of property that can be easily identified from the estate. An example: “I hereby give all of the furniture at my home on 1234 Main Street to my niece Phyllis. I hereby give my Rolex watch to my son Frederick.” Obviously, it is best to be as specific as possible with a specific bequest. If for example you had several Rolex watches, you might accidentally create a dispute in the above example.
Finally, a demonstrative bequest is a gift of a certain amount of property from a specific source or fund. An example: “I hereby give my cousin Henry $10,000 out of the sale of XYZ Corporation stock.”
Bequests provide a way to show appreciation for people in your life other than children. Maybe you have done pretty well for yourself and you have a younger sister who has had a lot of tough luck. You don’t want to give them a percentage of your estate, but you want to provide a gift of cash to help them out. A general bequest is a good way to accomplish this.
Charitable gifts can also be made via bequests and this is also a common use for them. I’ve had many clients make specific bequests to organizations committed to finding cures for illnesses, helping stray animals or to their church.