Sunday, September 22, 2013

Gifts Under Your Will


Gifts Under Your Will

We talked about general formalities of Wills, structures of Wills, and different components of Wills.  We talked about capacities and other special problems.  Let’s get into some of the technicalities of actually giving under your Will.  Please be very clear, we are talking about under a Will, not to be confused with giving under a Trust, or intestate rights without a Will.

In older Estate Plans, or perhaps in books or movies, you might hear phrases such as “gift” or “devise”, which I have used in my blog, but also “bequest” or “legacy”.  In the past a devise was a gift of land, and a legacy was a gift of money.  From this point on I may use them interchangeably, but will try to use gift or devise, as those are the most common terms today.

Probate Code §21117 recognizes 6 classes of gifts or devises.  There are reasons to be aware of these specific classifications, such as which carry interest with the gifts, or which are subject to abatement in order to satisfy expenses of the estate, or maybe accrue interst, or even gain income from the gift, but we will not review all of these at this time.  Let’s start with some definitions under the Probate Code.

Specific Gifts – is the transfer of specifically identifiable property – examples could include, my car, my collection, or maybe my house located at 10 Elm Street.  PC §21117(a).  A specific gift carries with it any permissible income earned after death, less any attributable expenses, from the time of death until the close of administration of the estate.  As taxes may be a huge expense and exposure, make sure to consult with a tax advisor, whether making the Estate Plan or when receiving such gifts.

General Gifts – is a transfer from the general assets of the transferor that does not give a specific property.  PC §21117(b).  An example of a general gift might be a certain amount of money, but it could also be general items like, “my stock in X corp.”, or “my farm animals”, or even “all my property”

General Pecuniary Gifts – is a pecuniary gift within the meaning of PC §21118.  PC §21117 (d).  This is a general gift of money.  $10,000 to my friend Fred.  This can also bear interest.

Demonstrative Gifts – is a general gift that specifies the fund or property from which the transfer is to be primarily made.  Commonly, this could be a gift of $1000 form my Bank of America account, or $1000 from the sale of Ford Stock.  PC §21117(c).  This differs from other gifts, because if the source of funds no longer exists, unlike a specific gift, it could be satisfied from other sources.

Annuities – is a general pecuniary gift that is payable periodically.  PC §21117 (e).  An annuity must be a certain or knowable amount to be paid over time.  A gift of $1000 per month, for life, is a classic annuity payment.  This differs from a gift of income, proceeds or a percentage.  The prime distinction is that an annuity is a fixed and knowable amount paid periodically, whereas the gift of income is contingent upon making income.  An annuity may draw from an express source, or if that source proves inadequate, there may be rights to draw upon other assets in order to satisfy the annuity.

Residuary Gifts – is a transfer of property that remains after all the specific and general gifts have been satisfied.  PC §21117 (f).  This is the catch all.  Whatever is left over after all the other gifts have been satisfied, can go by the residuary gift.

Next time we will talk about conditional devises, or gifts with strings attached.  In the meantime, I hope you will review your Estate Plan with you're “A” Team, or at least begin to seek out an Estate Planning Attorney to start this process.  Stay tuned for future blogs.  However, if you have any questions, feel free to respond below, or if you are interested in learning more about an Estate Plan, Wills, Trusts, Advanced Healthcare Directives, or Divorce, Custody, Visitation, Child Support, Spousal Support, Property Division, Modifications, Remarriage, or Pre-Nuptial Agreements, please contact me at please contact me at fbegun@gmail.com, or through my other websites, www.fcbegun.com, or www.linkedin.com for Fred Begun.