We are constantly discussing the types of gifts people want to leave behind in their wills – and a lot of the time, people try to give away more than they actually have. These clients typically attend our office with a long list of who gets what. Once we examine their assets, determine the value of funds that will flow outside of their estate, and estimate how much tax will need to be paid upon their death, we sometimes discover that the number of gifts exceeds the value of their estate.
Monetary gifts (otherwise known as ‘legacies’) are easy for an executor to calculate. Consider this example: Jane has an $800,000.00 estate, wants to leave a $100,000.00 to each of her four children, and wishes that the residue of her estate be distributed to her spouse. Jane’s executor can easily determine the value of the residue after debts have been paid and legacies have been gifted. But, what if Jane’s estate value decreases upon her death? Unfortunately, life doesn’t always go according to plan. Let’s say that Jane’s estate value is now $500,000.00. This could potentially leave her spouse with less than $100,000.00 of funds – and that was not her wish. While we would hope that our loved ones do not commence estate litigation, we need to acknowledge the possibility. This is why it is important to take your will out every five years or so and review your estate plan – we would suggest contacting an estate lawyer to ensure that your loved ones will be left with solutions, not problems.
When thinking about leaving gifts behind in a will, it may be beneficial to create a flowchart of different scenarios that could potentially arise. Consider your debts, expenses, taxes, and gifts in your will to determine what the value of your residue might be. Estate planning requires forward-thinking, and it is important to plan ahead. Meet with your lawyer to discuss the different ways that your will can be drafted so that your wishes can be carried out, regardless of significant changes to the net worth of your estate.
If you have any questions about your estate plan, you are welcome to contact our office at (780) 458-8228. Remember, we are here to help!