A frequently asked question about estate planning is, what is a bequest? A bequest is the legal term for the personal property someone identifies in their will or trust that will go to their heirs. A bequest can be made for any assets owned by someone including:
• property such as clothing, real estate, cars or boats
• money – cash, as bank accounts typically have a designated beneficiary which would supersede a will
• digital assets such as cryptocurrency or trademarks
• pets, livestock
• jewelry, antiques or collectibles
• stocks and bonds
1. Can I only leave a bequest to my family members or close friends?
No, you can leave a bequest in your estate plan to anyone you choose, including family members, charities, nonprofits, religious or educational organizations and other entities.
2. Is a bequest the same as a gift for tax purposes?
No. A gift is given while you are still alive and can be used toward the grantor’s gift tax exclusion, bequests are made in a will for distribution after the grantor has died. Alternatively, the grantor may want to set up a trust fund to gift money to their heirs while they are still living.
3. Are all bequests the same?
No, there are 4 different types of bequests depending on what type of asset it is and when it is distributed:
• Specific
A specific bequest is the transfer of a specific asset such as jewelry, artwork or a vehicle to a specific person.
• General
A general bequest is a gift, typically money, that is taken from the deceased’s general assets, not from a specific asset.
• Demonstrative
A demonstrative bequest is a gift that comes from a stated source like a bank account or retirement fund.
• Residuary
A residuary bequest is a gift that’s made after all debts are paid by the estate and other bequests are made.
4. Are bequests taxed?
It depends. Some states, including Illinois, levy a death tax. And some states levy an inheritance tax on residents. In addition, depending on the size of the bequest, federal taxes may apply.
5. Is it better to leave a charity a bequest or make a gift?
It depends. An experienced estate planning attorney can review your financial situation and your assets, and determine the best way to protect you and your heirs.
When thinking about how you want your assets distributed while you’re still living or after you pass away, you should consult an experienced estate planning attorney. The attorneys at Estate and Probate Legal Group can advise you on the best options to protect you and your heirs, and protect your assets from estate taxes. Contact us today at 630-864-5835.
AREAS WE SERVE: Cook, DuPage, Kane, Lake, and Will counties
