Did you know that an estate plan is a powerful legal tool you can use to not only protect your legacy, but to also ensure that your assets and property fall into the right hands after you pass away? Through your estate, you can make a bequest, which is a formal way of giving your assets away after your death.
Bequests can take on many different forms, based on what's important to the individual. As you might imagine, making bequests can be an emotional process. It's often a time where you reflect on all that you've accomplished, and how you wish for your legacy to live on.
Read this guide to find out the different types of bequests you can make, to help you kickstart your estate planning process. We'll also reveal the results from our recent study that tell us what Americans want to do with their money when they pass away.
What is an Estate Bequest?
An estate bequest, in its simplest definition, refers to the act of giving away assets such as money, property, or other valuables through a Will or an estate plan after death. This legal mechanism allows individuals to dictate the distribution of their wealth according to their wishes, ensuring that their legacy continues to support and provide for their loved ones or causes that they care about.
It's important to note that estate bequests are not strictly limited to money. They can also include sentimental items, family heirlooms, or even intellectual property.
By making an estate bequest, you can not only allocate your assets responsibly, but also express your values, beliefs, and life-long commitments, even when you are no longer physically present.
7 Types of Estate Bequests
When it comes to bequests and inheritances, the first thing that comes to mind is money. This is definitely a common type of bequest you can make. However, mentioned earlier, there are many other types of bequests you can make.
Here is a breakdown of the 7 most common types of estate bequests you can include in your estate plan:
1. Specific Bequest: This involves gifting a specific asset to a named individual or organization. For example, a certain piece of jewelry, a car, or a specific sum of money.
2. Residuary Bequest: This is often considered the "remainder" of an estate, after all other bequests have been fulfilled. If the decedent states that certain assets should be left to certain people, but doesn't specify for some, those left-over assets go into the residuary estate.
3. Contingent Bequest: This type of bequest is dependent on a certain event happening or condition being met. For instance, a bequest might only go into effect if a specified person predeceases the benefactor.
4. Charitable Bequest: This is a bequest made to a nonprofit organization or charity. It's a way for individuals to contribute to causes they care about, even after they're gone.
5. Demonstrative Bequest: This is a gift of a certain amount of money that must come from a specific source, such as a particular bank account.
6. Percent Bequest: This is a bequest of a certain percentage of the value of the estate or of particular assets.
7. Unrestricted Bequest: This is a bequest given to a beneficiary without any contingencies or restrictions, meaning the recipient can use it in any way they wish.
Popular Estate Bequest Examples
Wondering what individuals typically bequeath to their loved ones? There are no rules when it comes to what you can or cannot pass along to loved ones after you pass away. Typically, however, individuals tend to take the time to specifically relay estate bequests for items of monetary or sentimental value.
Here are 10 examples of common and popular assets and property that are bequested to loved ones:
1. Real Estate Properties: This includes homes, land, and commercial properties.
2. Cash: Often gifted as a specific or demonstrative bequest (explained in the section above), typically in the form of checking and savings account balances.
3. Stocks and Bonds: These investments can be passed on to beneficiaries.
4. Life Insurance Policies: The payout from a policy can be bequeathed to a named beneficiary, although not necessarily as a technical part of the estate. Life insurance policies often pass directly to the beneficiary outside of the probate process such that they can access the payout promptly upon the policy-holder's death.
5. Retirement Accounts: This includes assets from 401(k)s, IRAs, or other types of retirement accounts.
6. Jewelry: This can include family heirlooms or valuable pieces.
7. Artwork and Collectibles: Paintings, sculptures, antique furniture, and rare collections often hold significant value.
8. Vehicles: Cars, boats, or other vehicles can be gifted to loved ones through an estate.
9. Personal Items: These are often items of sentimental value, such as photographs or letters.
10. Family Businesses: A stake in a family business can also be bequeathed.
What Americans want to do with their Money when they Pass Away
Now that we have a better understanding of the different types of bequests one can make, let's take a look into Americans' preferences when it comes to passing on their legacies to future generations.
With that said, what do Americans want to do with their money when they pass away?
In a recent study, Trust & Will surveyed 2,000 Americans adults of all ages and backgrounds to better understand estate planning preferences today.
One of the questions asked survey respondents to share what they plan to pass down to loved ones when they pass away. Here were the responses:
Property or a house: 58%
Money: 50%
Pets: 48%
Vehicles: 44%
Collectibles: 41%
Jewelry or accessories: 39%
Family heirlooms: 38%
Clothing: 30%
Stocks or bonds: 27%
Furniture: 23%
Art: 18%
Airline miles or credit card points: 15%
I haven't planned yet: 5%
Nothing: 4%
The most popular responses were property, money, and pets, followed by vehicles and collectibles.
Interestingly, this is well-aligned with what Americans want to inherit from loved ones the most (which we revealed in this article here.) This means that if you fall into the majority of your peers who want to inherit property, money, or a pet, then chances that your loved one is planning to pass one or all of these things on to you are looking good!
Preference Check: Save for Future Generations vs. Spend it All?
The next question asked survey respondents if they would rather save their money so that they can pass it on to future generations, or spend it all during their lifetime:
Save money for future generations: 47%
Spend everything: 30%
No preference: 17%
Not sure: 6%
A little less than half of respondents indicated that they prefer to save money for future generations rather than spend it all. Conversely, roughly one third prefer to spend all their money and not save it as a pass of their legacy to pass on.
The thought of spending everything during one's lifetime, as opposed to creating generational wealth, may seem counter-intuitive at first. However, there must be reasons why nearly a third of respondents expressed this preference; that is not an insignificant number.
For starters, some individuals might believe in the philosophy of living in the present moment and enjoying the fruits of their labor while they can. They may place high value on personal experiences and wish to utilize their funds for travel, hobbies, or fulfilling lifelong dreams. Additionally, they may want to avoid potential family disputes over inheritances.
Some people might feel that instilling a strong work ethic and self-reliance in their future generations is more valuable than leaving them with a substantial inheritance. Last but not least, certain individuals may not have descendants to leave their wealth to, or they may choose to support charitable causes instead, believing their funds can make a significant impact in the lives of many over a few.
To clarify, these are some assumptions regarding why someone may want to spend all over their money instead of saving it for future generations. Regardless, these are some thought-provoking ideas that can give one pause to think about how the intention behind an estate strategy can have profound impacts.
Preference Check: Loved Ones vs. Charity
Similarly, we also asked Americans if they would prefer to donate a part of their estate to charity, or give it all to loved ones.
Are Americans today feeling charitable? Here are the results that share insights to how the nation is currently feeling:
Give it all to loved ones: 42%
Donate a portion to charity: 31%
No preference: 20%
Not sure: 6%
Leaving a gift to a cause is a highly personal decision. It is absolutely valid if you wish to leave everything you have to your children, for example. Otherwise, you can leave anywhere from a small fund to a large fund to a cause you care about. Whether you make a gift to scientific research, your faith-based community, or an animal rescue, the world is your oyster when it comes to supporting a nonprofit through your legacy.
Are you interested in making a charitable bequest through your estate plan? Trust & Will provides helpful guides on precisely how to do so here and here.
How to Make a Bequest in 6 Steps
Making an estate bequest is a significant decision that requires proper planning and understanding. It is a wonderful way to leave a lasting legacy, either by supporting loved ones or contributing to a cause dear to your heart. If you've made the decision to make a bequest, you'll need to know how.
Here's a step-by-step overview of how to make estate bequests:
1. Identify Your Bequest: The first step is identifying what part of your estate you wish to bequeath. This could be a specific property, a dollar amount, or a percentage of your estate.
2. Choose the Beneficiary: Decide who will receive your bequest. This could be your family members, a friend, or a charity.
3. Consult a Legal Professional: Estate laws can be complex, so it's helpful to consult an estate planning professional to ensure you understand all the implications of your bequest.
4. Draft Your Will: This is the legal document where you will specify your bequest. Make sure it's clear, unambiguous, and comprehensive. You can use a platform like Trust & Will to have peace of mind knowing that your Will is compliant in your state. We'll walk you through it, step by step!
5. Include Your Bequest in the Will: Clearly state in your Will who the recipient of the bequest is and what they are receiving.
6. Sign and Store Your Will Safely: After you're satisfied with your Will, sign it in the presence of witnesses. Store it in a secure place and inform your Executor where it can be found.
Remember, making a bequest is an act of love and legacy. By planning properly, you ensure your wishes are honored and your estate benefits those you care about most.
Plan your Legacy with Trust & Will Today
At Trust & Will, we understand the weight and importance of planning for the future. Estate bequests are a tangible way to leave a lasting impact on the people and causes you care about most.
As you reflect on your legacy and the gifts you'd like to leave behind, know that our team is here to guide and support you every step of the way. Let us help you navigate the complexities of estate planning, ensuring that your bequest - your lasting legacy - is handled with care, precision, and absolute respect for your wishes.
At Trust & Will, we’re here to help keep things simple. You can create a fully customizable, state-specific estate plan from the comfort of your own home in just 20 minutes. Take our free quiz to see where you should get started, or compare our different estate planning and settlement options today!
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Trust & Will is an online service providing legal forms and information. We are not a law firm and we do not provide legal advice.
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