If you’re thinking about setting up or updating your estate plan, you should also be thinking about the bequests you’d like to make, and to whom. In short, bequests are gifts you make as a part of your Will or Trust. We explained the bequest meaning in full here.
With that being said, did you know that there are different types of bequests that you can make? In this guide, we’ll explore 6 types of bequests in a will so that you can decide which ones make the most sense for your estate plan.
The types of bequests in a will are:
1. General Bequests
A general bequest describes a gift of a specific dollar amount, rather than a particular asset or property, made to someone through your Will. For example, you might say something along the lines of “I hereby leave $300,000 to my nephew Aaron,” rather than “I hereby bequeath my primary residence at 4566 Maple Street in New Hampshire, CT to my nephew Aaron.”
The bequest is paid using the general pool of assets in the estate. The value of the estate may increase or decrease over time, so there are some cases in which the dollar amount of the bequest must be adjusted. For example, if the size of your estate decreases after fulfilling creditor claims, your executor may need to adjust the amount of the general bequest accordingly. Learn more about general bequests here.
2. Specific Bequests
As you might have guessed already, specific bequests describe a provision in which you allocate specific assets to a beneficiary. It could be a piece of jewelry, a family heirloom, a car, or any other specific type of asset.
It’s important to include a detailed description of the item, especially for those that could be easy to confuse. For example, instead of stating “I hereby leave my mother’s earrings to my daughter,” you could include helpful details such as “I hereby leave my mother’s pearl and gold Tiffany earrings stored in my jewelry box to my second daughter, Jennifer.” Including these details can help prevent any confusion and strife within the family, especially because assets are so hard to distribute equally. Learn more about specific bequests here.
3. Residuary Bequests
What happens when your executor distributes property based on the different types of bequests you’ve included in your Will, and there’s still some assets and property left over? These also can be gifted through a residuary bequest.
This is a type of bequest that is made using the remainder of the estate, after all other distributions have been made per the instructions you’ve left. Because of this, a residuary bequest does not name any specific property or dollar amount. In some cases, the residuary bequest can make up the bulk of the estate, while it could also be small in other cases. The size of the residuary bequest typically depends on the size of other types of bequests that were made, along with any debt and tax payments that are made out of the estate. Learn more about specific bequests here.
4. Demonstrative Bequests
A demonstrative bequest includes specific instructions for how a particular asset or dollar amount should be distributed.
For example, you could make a demonstrative bequest by stating “I hereby leave $100,000 to my granddaughter Anna, to be paid from my investment account at Charles Schwab.” You might notice that this type of bequest is somewhat similar to a general bequest. The key difference is that a demonstrative bequest specifies where the dollar amount should come from, or how a specific asset should be distributed.
If that particular asset is sold or changes in value during your lifetime, it will be necessary to update any related demonstrative bequests in your Will. Learn more about specific bequests here.
5. Percentage Bequests
If you feel concerned about possible fluctuations of the value of your estate, or the assets named within your estate, consider making percentage bequests.
“I hereby bequeath 50% of my estate to my daughter Sophia.” This is an example of how you could leave half of your overall estate to one of your beneficiaries.
Percentage bequests can be a practical solution for dividing your estate between beneficiaries, including any charitable bequests, by proportion rather than by dollar value or property. This can also help ensure that each of your beneficiaries receive the proportions desired, regardless of the size or value of the estate at the time of distribution. This may require your executor to liquidate and sell property and assets in order to be able to divide up your estate. These are instructions that you should consider including to help guide any necessary decision-making.
6. Contingent Bequests
A contingent bequest is only fulfilled when certain conditions are met. This means that it is not guaranteed, making it unique from other types of bequests.
Here is an example of how a contingent bequest might be worded:
“I hereby leave $30,000 to my daughter Ava, but only on the condition that she graduates from a four-year university before the age of 23.”
In this example, Ava will only receive her inheritance with the contingency that she graduates from college by a certain age. If she does not meet the conditions, she will not receive this particular bequest. In general, contingency bequests are specific in nature and fall through if the conditions aren’t met.
A contingency bequest can also be made to provide alternative arrangements in case that the grantor’s beneficiary passes away before the estate plan is executed. For example, you could state something along the lines of:
“If my wife Sarah and my son Lucas are predeceased, I bequeath 50% of my estate to the Leukemia & Lymphoma Society, and any remainder of my property to my niece Ana.”
In the scenario above, the grantor made a contingency bequest in the scenario that neither his wife nor his son survive them. Also note that they also included a percentage and a residuary bequest in the same statement, showing that it’s possible to make use of several different types of bequests in a will.
Create Your Will and Specify Your Bequests Today
Hopefully, the different examples in this guide demonstrated how you can incorporate bequests in specific and creative ways. By using several different types of bequests in a Will, you can carefully craft how you’d like for your legacy to be passed on.
You may have noticed that you don’t have to use bequests independently of one another. You can use them conjointly in any number of combinations to help you achieve your desired outcome. Further, you can incorporate any number of contingency bequests to help plan for cases in which certain events do or do not happen.
Trust & Will’s online will creation services make it easy for you to start creating your Will! If you feel ready to start putting theory to practice, you can begin creating your Will and incorporating some of the contingencies that you learned about today. Don’t worry, you’ll have guidance and assistance every step of the way.
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