As the executor or executrix of an estate, your first step in beginning the probate process is to determine if the estate owner passed away testate (with a will) or intestate (without a will).
If the deceased did pass away with a will, then you will need to determine the format of the will and then begin the sometimes-difficult process of interpreting the will.
You’ll likely encounter language in the will outlining certain bequests—or gifts—as the testator outlines the distribution of the estate assets to beneficiaries or heirs.
Gifts outlined in the will can have a variety of formats, as not all bequests are the same. Let’s take a look at those types of gifts.
What are the types of gifts in a will?
There are four types of gifts in wills:
- Specific Gifts
- General Gifts
- Demonstrative Gifts
- Residuary Gifts
Let’s take a closer look at those four types of gifts:
Specific Gifts
Specific gifts are bequests that directly name both the specific asset and the beneficiary who is intended to receive that asset.
These types of gifts are the most common bequests outlined in wills. If you think of assets being gifted through the will, specific gifts are the bequests that likely come to mind.
Examples could include a testator giving a car to his son or giving a house to his daughter. These are specific assets that are being given directly to a named beneficiary.
What type of assets can be distributed through specific gifting?
Nearly anything. A gift can be a baseball card, a car, a home, artwork, jewelry, photographs, watches, or really any other specific item.
As long as the testator legally owned the specific asset, then that asset can be distributed as a specific gift.
What is important to understand here is that the asset must be distinguishable from other assets. Or clearly a unique item.
Specific gifts can’t just be $1,000 in cash, for example, because the cash is indistinguishable from other cash that the testator owned.
And if it isn’t distinguishable, then it is considered a general gift.
General Gifts
As its name suggests, general gifts are used when distributing a general (non-distinguishable) asset to a named beneficiary or heir.
General gifts are often used to distribute a specific amount of cash from the estate.
Let’s revisit the point on distinguishability that we outlined above. A dollar is generally indistinguishable from another dollar, and what matters is not the specific dollar that is given but the total amount of the gift.
These gifts name a specific value—$1,000, for example—but do not stipulate that the cash comes from a specific source. As long as the $1,000 comes from any source, the bequest outlined in the will is satisfied.
Demonstrative Gifts
A demonstrative gift names assets from a specific source but does not name the individual gift.
This might seem counterintuitive, but the best way to think about this type of gift is to think of a portion of a collection of assets being gifted.
For example, a testator might want to leave one baseball card from a valuable baseball card collection to each of his grandchildren. Because the testator wants each of his grandchildren to choose a card for themselves, he specifies that they each receive one card of their choice from the collection.
Because the grantor specified the source, but not the individual items within the source, this type of gift is known as a demonstrative gift.
Demonstrative gifts can also be cash bequests. Unlike general gifts, however, demonstrative gifts must specify the source from which the cash comes.
An example of this would be if the testator stipulates that cash should be given from a sale of stock shares or from a specific investment account.
Because the specific asset is not named but the source is named, this type of bequest would be a demonstrative gift.
Residuary Gifts
Residuary gifts are bequests that distribute the remaining funds to a named beneficiary or beneficiaries after all of the estate’s debts and administrative costs have been paid and all specific, general, or demonstrative gifts are completed.
In probate court, the residuary of the estate is everything that is left after the payment of debts, handling of administrative costs, and any other types of gifts.
The residuary gift is typically distributed in a “residuary clause” that is outlined in the will.
The residuary gift is distributed to the residuary beneficiary or beneficiaries. These beneficiaries are the “last beneficiaries” that receive any remaining assets from the estate after all costs and other distributions have been paid.
Does the residuary beneficiary need to be an individual? No, it doesn’t.
In many cases, the residuary gift will be granted to the testator’s favorite charity or nonprofit organization. The residuary clause will specifically name the organization as the residuary beneficiary of the estate.
Now that we’ve taken a look at the four types of gifts in a will, let’s ask an important question.
How do you know if someone created a will?
How do you know if someone created a will?
As we mentioned above, it’s important to know whether an individual passed away with a will or without a will. The distinction between a testate and intestate death can have drastic consequences on the probate process and the distribution of assets.
But what if you don’t know if the estate owner created a will before their death?
You will need to begin a “will search,” which is the task of finding out whether someone died with or without a will.
If you don’t know where the deceased’s will might be, there are a number of places to begin the will search: the deceased’s local clerk of court, house, personal safe, safe deposit box, family members and friends, attorney office, and bank are all good places to start.
It can be laborious to locate the deceased’s will, but finding the document ultimately determines the length and difficulty of the entire probate process.
Let’s suppose that you complete the entire will search but do not locate the document. You’ll need to assume that the deceased passed away intestate.
What if the deceased passed away intestate?
If the deceased passed away intestate, then the entire probate process and method of asset distribution will change. Even simple bank accounts—like checking and savings accounts—are determined by intestate laws.
If the deceased did pass away intestate, then the types of gifts in a will won’t matter—that should be obvious, as there won’t be a will. But that’s not all.
Other important aspects of the probate process—like naming the executor of the estate—will also be determined by the court.
You can see why that might be a problem. The estate owner likely had someone in mind to serve as the executor and oversee the administration of the estate. But without a written will outlining the estate owner’s last wishes, the court won’t know who the estate owner’s intended executor might be.
No one ever plans for their own death, which is why so many people die without creating a will. But dying intestate can have serious consequences for your estate, as the determination of an executor and the distribution of assets will be determined by the probate court.
So our advice? Write a will. It's always worth it.