Publications

The Gifts You Make In Your Will

There's no set formula for what goes into a will. It depends on your unique situation and what you want your will and estate plan to accomplish.

This article will help you understand some of the considerations that go into passing property in a will. It's designed to help you understand why certain language is in the will your lawyer prepares for you, and to focus your thinking as you and your lawyer decide how to best accomplish your goals. Your property should be transferred exactly as you want it to be.

Gifts of Personal Property
Identify Carefully. It's important to be very clear about all recipients of your gifts. Include their addresses and relationships to you. There are too many cases of people leaving property to "my cousin John", not realizing that more than one person might fit that description. Or you leave something to "my sister's husband", and she later divorces him and remarries - who gets the gift? A court might have to decide.

Think About How to Divide Gifts. If you have several children or other relatives in the same category (cousins, siblings, etc.), and you want them to divide your estate or some portion of it equally, your will should state that you are giving the gift to the class ("my cousins and not their descendants") not to them as individuals ("Mutt and Jeff").

That way, if one of them dies, the others would take the whole gift. Otherwise, the gift to the dead cousin might fail (lapse) and his share might pass as if you had written no will at all (the legal terms is intestacy).

On the other hand, if you definitely do want a beneficiary's children to take a gift if he dies first, your will would use language that indicates this, typically "to my cousins, A, B, and C, but if any of them does not survive me, his share to his descendants, per stirpes".

(Per stirpes is a Latin phrase meaning that these descendants will split the share that would have gone to your dead cousin.) This is technical territory, which shouldn't be entered without the advice of your lawyer, but the main thing to remember about gifts to a class is this; if you have several beneficiaries, the will's language should account for the possibility of one of the beneficiaries dying before you do.

Be Specific. For similar reasons, your will should usually be specific about the gifts you are making. Don't just leave "household property" to someone, because that category is vague enough to spark a dispute in court, or at least in the family. Spell out the items ("stereo equipment, clothing, books, cash"), or just omit any mention at all and let them pass through the residuary clause (discussed later in this article).

On the other hand, in cases where the specific item of property might change between the time you write the will and the time you die, your will might be more general in its phrasing - leaving your son not "my 1986 Yugo" but "the car I own when I die". The same applies to bank accounts; the bank may be taken over by another bank. Better to include a general description or leave a dollar amount or fractional share of your estate.

Be Clear. Your lawyer will make sure your language in giving the gift is unambiguous: "I give..." "I direct thatÉ" etc. Wishy-washy terms like "It is my wish that..." might be taken to be merely an expression of hope, not an order. Such precatory language could invite a court challenge.

If you want specific gifts of sentimental value to go to certain people, consider giving them to those people before you die, so you can witness their pleasure. Or, some attorneys advise leaving most items to one or two people, and then writing a letter of intent that advises those people about how you want them to spend that money or distribute those items. Some states have laws providing for these letters but some do not. That means LETTERS OF INTENT MAY NOT BE LEGALLY BINDING. Use them only with people you can trust. (In many states, another way to handle specific bequests of personal property is through a tangible personal property memorandum, or TPPM. Ask your lawyer how it works.)

Be Inclusive. Remember also that personal property can include intangible assets like insurance policies (for insurance, if you own a policy on your spouse's life, that policy and the cash value of the premiums paid into it can be passed on through your will), bank accounts, certain employee benefits, and stock options.

Avoid leaving shares of stock of a designated publicly held company to a beneficiary. The stock may increase substantially in value to upset your plan with respect to other beneficiaries. Or it may go down in value and upset your plan. Or it may be disposed of in your lifetime. It would be better to give that person a specific percentage or fraction of your estate.

Considerations When Giving a Gift to Be Shared. Finally, if you have multiple beneficiaries you want to shrea in a gift, your will should specify what percentage of ownership each will have. If it doesn't, the court will probably presume that you intended the beneficiaries to share equally. Most lawyers counsel against shared gifts, because it means several people have to agree on use of the property, and one co-owner may be able to force a sale. But there are some indivisible assets - a house, for example - where you may have little choice but to let more than one person share in the gift. If so, talk to the beneficiaries first and make sure they agree on how they'll jointly use and manage the gift. And be sure to designate alternative beneficiaries (usually the others who will share in the gift) in case one of them dies before you do.

Don't Forget Charities. Your will can be used to give gifts to institutions and charities as well as to people. And you may be able to save on taxes by using gifts wisely.

Residuary Clause
This is one of the most crucial parts of a will, covering all assets not specifically disposed of by the will. You will probably accumulate assets after you write your will, and if you haven't specifically given an asset to someone, it won't pass through the will - unless you have a residuary clause that, as Lyndon Johnson used to say of grandmother's nightdress, covers everything. (if your will omits a residuary clause, the assets not left specifically to anyone would pass as though you wrote no will, through the intestate succession laws, possibly after long delays and extensive court involvement).

No matter how small your residuary estate seems at the time you write your will, you should be sure that your will distributes it. If you decide to leave it to more than one person, your will should specify the percentages or fractions if other than equal.

The residuary clause distributes assets that you mightn't have anticipated owning. For example, you might inherit property after writing your will. And normally anything you own in joint tenancy with right or survivorship would pass automatically to the other tenant at your death, and so you wouldn't include it in your will. But what if the joint tenant dies before you? Your estate would then probably own the entire asset, and your residuary clause would ensure that it goes to someone you care about.

Gifts of Real Estate
Most people prefer that their spouse receives the family home. If the home isn't held in joint tenancy (survivorship), you should have instructions about what will happen to it in your will.

If you die before you've paid off the mortgage on your house, your estate might have to pay it off. If you are afraid this will drain the estate too much, or if you want the recipient of the house to keep paying on the mortgage, you must specify that in your will. If you haven't paid off the family house, and you're afraid your survivors can't afford to, you may be able to buy mortgage-cancelling insurance to pay it off.

The foregoing comments are of a general nature, and are not intended nor should they be used as a substitute for legal advice or opinions which can be rendered only when related to specific fact situations.

Close this window to return to the site.