Each individual’s estate distribution is unique, with varying outcomes. If probate fee planning has been aggressively done, the majority of the wealth may be passed outside of the estate. However, an individual has the power to decide how specific assets are distributed through the Will, which allows for specific gifts to be given to individual beneficiaries. Lets see how different clauses for these specific gifts could be used.
§ Estate distribution refers to how a person’s wealth and assets are divided after they pass away.
§ A Will is a legal document that can be used to distribute specific assets to individual beneficiaries.
§ Drafting a will can be challenging, and difficult decisions may need to be made about how specific property should be dealt with if the primary beneficiary dies before the person writing the Will, or if the property is no longer owned at the time of death.
§ One common method of distribution is to use a residual clause, which divides the estate into equal parts for each beneficiary to receive.
§ If a beneficiary dies before the person writing the Will, the parts created for that beneficiary are extinguished, so that the remaining equal parts have a greater value.
§ A hotchpot clause can be added to adjust the distribution to a particular beneficiary to account for specific gifts or property passing outside the estate.
§ It’s important to estimate the cost of dying and ensure there is enough money available to pay all expenses, TAXES, and specific legacies.
§ Charting out and showing each beneficiary’s actual inheritance can help the person writing the Will visualize the final result.
§ If the result is not what was intended, adjustments may need to be made to the Will or beneficiary designations. The lawyer can suggest several alternative approaches and discuss the consequences of each, providing you with a framework to make an informed choice.
Disclaimer: This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction.
