What is a bequest?

Passing on your belongings is an important part of estate planning. The gifts you leave are a powerful way to provide for the people and causes you care about. And through these gifts — known as bequests — you can create a legacy that lasts long after you’re gone.

What is a bequest?

A bequest is a gift of personal property that you leave to an individual or organization in your last will and testament. Bequests can include cash, stocks or other investment assets, and personal property (like jewelry, artwork, or furniture). You can leave a bequest to anyone you want, including family members, friends, or even nonprofit organizations.

Through bequests, you can make sure your property is distributed according to your wishes after you pass away.

Types of bequests

There are several types of bequests you can make, including:

• Specific bequest: A specific bequest is the gift of an item or asset to a specific person. For example, you may leave your stamp collection to your nephew.
• Demonstrative bequest: A demonstrative bequest is the gift of an item or asset paid from a specific source. For example, you can choose to leave $10,000 from your savings account to your grandchild.
• General bequest: A general bequest is a gift taken from your overall estate, meaning the gift isn’t coming from a specific asset or account. Cash is the most common type of general bequest. For example, you could make a $25,000 bequest to your sister, without specifying which account this money should come from.
• Conditional bequest: A conditional bequest depends on a specific event happening. For example, you could leave a $50,000 bequest to your daughter on the condition that she graduates from college.
• Residuary bequest: A residuary bequest includes all the assets left in your estate after paying your debts and distributing other bequests. For example, you could choose to leave all your remaining assets to your favorite charity.
• Devise: A gift of real estate in your will is called a “devise,” not a bequest. For example, you would include a devise in your will to transfer ownership of your house to someone else.

What is a charitable bequest?

A charitable bequest is any gift you leave to a charitable organization, like a nonprofit, educational institution, or religious organization. Charitable bequests are sometimes called “planned gifts” and can include cash donations, investment assets (like stocks or cryptocurrency), or personal items.

Including a charitable bequest in your estate plan is a wonderful way to support the causes that matter most to you, even beyond your lifetime.

Learn more about how to donate to charity in your will.

How does a bequest work?

To make a bequest in your will, you need to list the following information:  

• The property or asset you want to leave as a bequest
• The name of the beneficiary who should receive the bequest.
• Any conditions your beneficiary needs to meet before the bequest is made (like graduating from college or getting married)

After you pass away, your estate will go through a court-supervised process called probate. During probate, your executor (the person you list in your will to manage your estate) will carry out your wishes according to your will. Your executor will inventory your assets, pay any debts and taxes, and fulfill your bequests by distributing your assets to your beneficiaries.

If you pass away without a will (known as “dying intestate”), your county court uses a set of rules called intestate succession laws to decide what happens to your estate. This means you won’t have a say in who receives your property.

How bequests affect your taxes

There are many ways bequests can impact your beneficiaries’ taxes, including:

• Estate tax: If the total value of your estate is more than the federal or state estate tax exemption, it may be subject to estate tax. The 2023 federal estate tax exemption is $12.92 million, but your state’s exemption may be lower. Right now, only 12 states (plus Washington D.C.) have an estate tax, so check your state’s laws to find out if yours is one of them. Estate tax must be paid before your beneficiaries can receive your assets.
• Income tax: Your beneficiaries may have to pay tax on any income they earn from a bequest, including interest, dividends, or rental income.
• Inheritance tax: In some states, your beneficiaries may have to pay an inheritance tax on the property or assets they receive through a bequest. Right now, only six states charge an inheritance tax, so check the laws in your state. (And keep in mind that inheritance tax is calculated based on the state where you live, not where your beneficiaries live.)
• Capital gains tax: If you own stocks, they likely have been increasing (or “appreciating”) in value for years. But if your beneficiaries decide to sell your stock after you pass away, they’ll have to pay up to 20% in federal taxes on the amount gained. This is known as capital gains tax.  

If you have any questions, an estate planning attorney can help you set up your estate plan in a way that reduces or avoids certain taxes.

Leave bequests for your loved ones by making a will

By including bequests in your will, you control how your assets are distributed after you pass away and who should receive them. Bequests are a meaningful way to support your loved ones and create a lasting legacy when you’re gone. But in order to make a bequest, you first need a will.

FreeWill makes creating your will easy. With our free will-making tool, you can write your will in as little as 20 minutes. Simply fill out our guided questionnaire, print your documents, and follow the instructions to make it a legally-binding document — all for free.