Definition
A bequest is a gift made by a will, which encompasses the transfer of personal property, money, or real estate from a deceased person (testator) to a designated beneficiary. Bequests can be specific (a particular item or amount of money) or residuary (what remains after all other bequests, debts, and expenses). They are an essential aspect of estate planning, ensuring that the decedent’s wishes are fulfilled and their assets distributed according to their instructions.
Examples
- Specific Bequest: John Doe leaves his art collection valued at $50,000 to his daughter, Jane Doe.
- General Bequest: Mary Smith bequeaths $10,000 to her nephew, Tom Smith.
- Residuary Bequest: After all debts and specific bequests are settled, the remainder of Sarah Johnson’s estate is left to her favorite charity.
Frequently Asked Questions (FAQs)
Q1: What is the difference between a bequest and a devise? A1: Both terms refer to the transfer of property through a will, but a bequest typically refers to personal property, while a devise specifically pertains to real estate.
Q2: Can a bequest be changed or revoked? A2: Yes, a bequest can be updated or revoked at any time by the testator through a new will or a codicil, as long as they are mentally competent when making the change.
Q3: Is a bequest subject to taxes? A3: Yes, bequests can be subject to estate or inheritance taxes depending on the jurisdiction and the value of the estate.
Q4: What happens if a beneficiary predeceases the testator? A4: If a beneficiary predeceases the testator, the bequest typically lapses (fails), unless the will specifies an alternate beneficiary or is structured to include a residuary clause.
Q5: How can a bequest be contested? A5: A bequest can be contested on grounds such as mental incapacity of the testator, undue influence, fraud, or the improper execution of the will.
Related Terms
- Will: A legal document by which a person expresses their wishes as to how their property is to be distributed at death, and names one or more persons to manage the estate until its final distribution.
- Estate Planning: The process of arranging the management and disposal of a person’s estate during life and after death.
- Trust: A fiduciary arrangement allowing a third party, or trustee, to manage assets on behalf of a beneficiary or beneficiaries.
- Probate: The judicial process through which a will is validated, and the decedent’s estate is administered.
- Inheritance: Assets received from a deceased person’s estate.
Resources and Suggested Books
Online Resources:
Books:
- “The Complete Guide to Planning Your Estate in Texas: A Step-by-Step Plan to Protect Your Assets, Limit Your Taxes, and Ensure Your Wishes Are Fulfilled” by Linda C. Ashar.
- “Plan Your Estate” by Denis Clifford.
- “The Executor’s Guide: Settling a Loved One’s Estate or Trust” by Mary Randolph J.D.
- “Estate Planning For Dummies” by N. Brian Caverly and Jordan S. Simon.
Accounting Basics: “Bequest” Fundamentals Quiz
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