WILLS AND TRUST BEQUESTS

Do you know how you want your assets to be distributed upon your death?

Ideally, we all should have an estate plan in place- either a last (“Will”) or a trust. A Will is the name of the legal document that allows you to control exactly how your assets are distributed after your death. If you die without a will, or as is referred to legally, as “intestate”, the will follow the state and determine who gets your assets upon your death.

Unlike a Will, a trust allows you to control how your assets are distributed both during your life and as well as after your death. In order to establish a trust, you would have to transfer ownership of your assets to the name of your trust. Since the trust then owns the assets, there is nothing for the courts to control when you die. A trust has the added benefit, as opposed to a Will, of being a means of avoiding all costs, delays and publicity of the probate process. Given it complexity to set up, a trust, is though, more costly to create than a Will.

Bequests, whether they be made within a Will or trust can be effectuated in a variety of ways. You have a lot of freedom when structuring your gift. A “” (maker of a Will) or a “settlor” or “grantor” (maker of a trust) can make a bequest specific or residual, unrestricted or restricted. This allows you to have your gift made exactly how you envision it.

Specific or Residual Gifts Some people choose to make a specific bequest of cash or other property, real or personal. It can be specific, as in a specific amount of money (e.g., “I give and bequeath $5,000 to… ”), or specific property, like common stock in a publicly-traded corporation (e.g., “I give and bequeath all of my common stock in XYZ Corporation to…”). The following would be an example of language used to make a specific bequest to the Diocese of Norwich: “I give, devise and bequeath to the Norwich Roman Catholic Diocesan Corporation, a nonprofit religious organization, organized under the laws of the State of Connecticut, and with a current address of 201 Broadway, Norwich, Connecticut, 06360, the sum of $10,000 and/or the following described property: my gold Rolex watch…”

Another alternative is to make a bequest unspecific and residual, which refers to all or a stated percentage of the rest or residue of the donor’s estate, (“the residuary estate”) after obligations of the estate and specific bequests have been paid (e.g., “I give the rest, residue and remainder of my estate to…”). Frequently, donors will decide to divide their residuary estate into shares and give shares to different people and charities to which they had not already left specific bequests.

Unrestricted or Restricted

Donors also have a choice as to whether they want their bequests to be considered unrestricted or restricted. Most bequests made to the Diocese and its organizations are unrestricted, meaning that the donor wants the organization to have the freedom to use the bequest in a manner it deems appropriate in carrying out its mission. Unrestricted bequests should contain language clearly stating that they are unrestricted (e.g., “…$10,000 to the Norwich Roman Catholic Diocesan Corporation, for its general use and purpose.”).

Much less frequently, a donor will restrict the bequest to be used for a particular purpose or purposes. The language of a restricted bequest might provide, for example, for a sum of money to be paid “to the Norwich Roman Catholic Diocesan Corporation, to be used by said organization in providing tuition assistance to students attending Diocesan elementary schools.” Prior to formalizing a restricted bequest, the donor or his or her attorney should make certain that the desired restricted purpose is one that the charitable organization will be capable of carrying out. The Diocese of Norwich will provide advice on this issue to help the donor ensure that the purpose will be able to be accomplished by the Diocese or its organizations.

Provisional Bequests

Another area that people making Wills or Trusts should consider is provisional bequests. If you leave money to Michael Smith and he predeceases you, have you named a contingent or back up recipient? Very often, people will name a charity as a back up recipient in the event the named beneficiary is no longer alive. Such a provision is very easily included in the language of your Will or Trust. (e.g. “I give and bequeath to my brother, Michael Smith, $5,000, but if he fails to survive me, then I give and bequeath such sum of money to the Norwich Roman Catholic Diocesan Corporation, for its exempt purposes, without restriction.”)

As always, donors should carefully think about each bequest they would like to make, and consult with their attorneys about the manner in which the bequests should be structured to best match their intentions. To receive suggested, model language for bequests to the Diocese of Norwich or any of its parishes, schools or ministries or to receive more information on Wills seminars that our staff would be happy to conduct at your parish, please contact Mary Ellen Mahoney, Development Manager-Major Gifts, at [email protected] or 860- 886-1928 ext. 14.

The information presented on these Web pages is not offered as legal or tax advice. You are urged to seek the advice of your tax advisor, attorney and/or financial planner to make certain any gift you are considering is appropriate for your specific circumstances.