When you create your Last Will and Testament, you’re faced with deciding how to distribute your assets to loved ones, cherished friends or charities. Since there are several ways for you to slice up your pie, it’s wise to familiarize yourself with the options available to you.
You’re free to employ one or all of these methods in your Will, so don’t think you have to choose just one. The decisions you make will depend on factors such as whether you are married, divorced, have adult or minor children (or both), have close friends to whom you wish to bequeath something or even if you elect to leave something to charity.
1. Per stirpes distribution
Let’s say you’re a widower with three adult children, and you want each of them to inherit an equal amount from your estate. That’s known as a per stirpes distribution. In other words, each would receive one-third of your estate, or at least one-third of whatever portion of your estate you set aside in your Will for your children’s inheritances.
If, for example, one of your three children predeceases you but they have two children of their own, that one-third gets distributed to your lineal descendants. In other words, the one-third portion that would have gone to your deceased offspring will now get divided into half for each of your grandchildren.
However, assume for a moment you have three children, and you still want each to inherit an equal amount from your Will. If one predeceases you and you want your estate to be inherited by your children alone, then the per capita method of distribution is the option for you.
2. Per capita distribution
In a per capita situation, the surviving beneficiaries split the inheritance. So, if you have three adult children but one predeceases you, that one-third gets divided between your two surviving children. In other words, the two survivors would each receive half your estate, rather than their one-third slice of the pie.
3. Specific bequest
Regardless of which method you employ to distribute your estate, you’re still entitled to bequeath certain items and even money to a certain person.
A specific bequest is exactly what it sounds like. It occurs when your will clearly states the name and address of a beneficiary along with a detailed description of exactly what you want them to inherit. Say you always enjoyed chats with your favorite nephew as the two of you dueled one another while playing chess with your hand-carved, maple wood chess set. You would like him to have it after you die. Include that information in your will, and your nephew will battle the bishop and capture the king for many years to come.
4. Residuary estate
You can’t be certain all your beneficiaries will outlive you long enough to inherit from you. Plan for that possibility by creating a residuary estate in your Will. That involves including language in your will stating that if no beneficiaries survive you, your estate should be donated to a charity, for example.
It’s wise not only to name the organization(s) to whom you want to leave your residuary estate, but also to include its mailing address and phone number. That information will make your executor’s job of distributing your residuary estate a lot easier.
All of these methods of distribution presume you died with a valid Last Will and Testament. However, if you die without a valid Will, meaning you died intestate, none of these laws of inheritance apply. In that scenario, the probate laws of your state will determine who gets what.
Which method of distributing your estate do you believe to be the most fair?