What Is a Bequest?

A bequest is a gift of assets to individuals or organizations through the provisions of an estate plan, such as a will or a trust. Bequests can be made to family members, ♏friends, institutions, or charities.

Understanding Bequests

The 澳洲幸运5官方开奖结果体彩网:Internal Revenue Service (IRS) has an estate and gift tax exemption of $13.61 million per individual for 2024 ($12.92 million for 2023). The annual gift exclusion amount for 2024 is $18,000 ($17,000 for 2023).

This essentially means that an individual may leave $13.61 million to their heirs and pay no federal estate or gift tax as of 2024.

Gift givers can also exercise their 澳洲幸运5官方开奖结果体彩网:Crummey power, a technique that enables a person to receive a gift that is not eligible for a gift-tax exclusion and change it into a gift that is eligible. Individuals often apply Crummey's power to contributions in an 澳洲幸运5官方开奖结果体彩网:irrevocable trust. In order for Crummey's power to work, an individual must stipulate that the gift is part of the trust when it is drafted, and the gift cannot exceed $18,000 annually, per 澳洲幸运5官方开奖结果体彩网:beneficiary ($17,000 for 2023).

Generally speaking, the 澳洲幸运5官方开奖结果体彩网:gift in trust structure is commonly used by parents or grandparents looking to establish a trust fund for their children or grandchildren. Charitable gifts after death, also known as legacy gifts, also have th💛e power to reduce estate taxes.

Not surprisingly, such bequests can be important sources of fundraising for 澳洲幸运5官方开奖结果体彩网:nonprofit organizations.

Bequests and Estate Planning

Individuals and families looking to grow and/or preserve assets for future generations can benefit from the creation of an estate plan.

An estate plan is comprised of many parts, and it's typically centered around a will. This legal document gives instructions about what will happen to your property after your death, including any bequests that you make for your beneficiaries (typically your family, your friends, and your favorite charitable organizations). You can also name beneficiaries in other ways, such as on retirement accounts and life insurance policies. You might also consider forming a trust, though this is t💝ypically reserved for special circumstances or when your estate is particularly large. For🔯 most situations, a will is enough.

Dying without a will is known as dying intestate. This can be a long and expensive process for your loved ones, as the estate must go through probate court. An executor is named to handle the process.

It's a good idea to create a will, as it details your bequests and makes the process of distributing your assets more streamlined and efficient—instead of leaving your loved ones with a good deal of work to do, on top of everything else they'll be going through.

The Bottom Line

A bequest is a gift as outlined in a will or a trust—it's something that's left behind for loved ones. The recipient can be either an individual or an organization, from heirs to charities.

Without an estate plan, you can't make bequests, and your loved ones won't have access to your assets. That's why it's important to make a will: to make your wishes known and to outline your bequests in writing.