Beneficiaries and Bequests: What Does That Mean for Your Estate Plan?

Florida Estate Plans and Beneficiaries Attorney

During the estate planning process, you will have plenty of terms thrown your way. While preparing your estate documents, you will designate a beneficiary. A beneficiary is a person who receives your assets upon your death. The beneficiary, however, is not the bequest.

Instead, a bequest is a gift of your personal property and assets that you pass on to an entity or person through your trust.

Digging Deeper into the Beneficiaries

There are two main categories of beneficiaries: Primary and contingent beneficiaries.

• Primary Beneficiaries – Primary beneficiaries are individuals or entities that you specifically designate to receive your assets.
• Contingent Beneficiaries – These are beneficiaries that receive the assets only if a primary beneficiary cannot be located or is deceased at the time of distribution.

If neither the primary or contingent beneficiary is available, then the estate will be passed on to the next heir in line in accordance with the law. You can avoid this from happening by clearly identifying your beneficiaries and the hierarchy through which you wish to pass those assets, should your primary and contingent beneficiaries not be able to receive their inheritance.

Beneficiaries that you can select for your estate include:

• Minor Children – If you have minor children, you can set them up to receive your trust, and the trust will hold onto the funds until they are legal adults or reach an age specified by you (e.g., 25 years old).
• Trust – You can have a trust as your beneficiary, which then distributes assets incrementally to recipients.
• Charities – If your primary beneficiary is no longer available, consider setting up a contingent beneficiary that is a charity to which you would like to give.
• Surviving Parents – You may be able to name your parents, but you will want to see if your assets will increase their estate size. If so, they could be subjected to higher estate taxes upon their death.

A Better Understanding of Bequests

There are multiple types of bequests in estate planning. The most common are:

• General – This is a general request that sends cash or property to beneficiaries.
• Specific – With a specific bequest, you can designate a dollar amount of cash or a monetary value in property to be given to a beneficiary.
• Percentage – If you are unsure about the exact value of assets within your trust, you can bequest based on a percentage, such as 50 percent of your estate or 25 percent of your family home’s sale proceeds.
• Charitable – This is a gift that goes to a charity of your choice and may reduce any estate taxes.
• Residual – This can include whatever portion remains of your estate after all other bequests are completed.
• Demonstrative – This includes sending a gift to someone from a particular source within your estate assets.
• Executory – This is a gift that only occurs when a certain event happens, such as distributing assets when a child graduates from college or turns 25 years old.

In a nutshell: Bequests are estate actions, while beneficiaries are those who receive the bequests. Both are required in estate planning; therefore, it is best to consult with an estate planning lawyer to ensure your beneficiary designations line up with your bequests.

Contact the estate planning attorney at Beller Law, P.L. to explore your options for estate plans and to receive assistance naming beneficiaries and creating your bequests. Schedule your consultation now at 904-288-4414 or request information about estate planning online.