Is an Inheritance and a Bequest the Same Thing?
Like most areas of the law, estate planning includes concepts and legal jargon with which the average person is unfamiliar. For example, the words “bequest” and “inheritance” are often used interchangeably when, in fact, they are not always synonymous. To help you understand both terms, the Indianapolis estate planning attorneys at Frank & Kraft explain the difference between an inheritance and a bequest.
What Is an “Inheritance?”
While it may sound like the answer to one of those logic problems used in standardized testing, a bequest is an inheritance, but an inheritance is not always a bequest. An “inheritance” refers to assets, whether tangible or intangible, that are gifted to you after someone dies. An inheritance could be cash, real property, personal property, or a variety of other things. An inheritance can be in the form of a bequest in a Last Will and Testament but can also take the form of a provision in a trust or because you are a legal heir to the estate.
Some people choose to use a trust as the primary method of distributing their estate. A trust is a relationship whereby property is held by one party for the benefit of another (or others). Trusts are broadly divided into living trusts and testamentary trusts with the former activating during the lifetime of the Settlor (the creator of the trust) and the latter typically being activated at the time of the Settlor’s death by a provision in the Settlor’s Will. If you are named as the beneficiary of a trust that distributes assets to you after the death of the Settlor, those assets would be considered an inheritance – but not a bequest.
If someone dies intestate, or without a Will or trust in place, the Indiana intestate succession laws determine how the decedent’s assets are distributed. In that case, only legal heirs to the estate will inherit assets. Which (if any) heirs survive the decedent determines who receives an “inheritance” as follows:
- Children but no spouse. Your children inherit all your assets.
- Spouse but no descendants or parents. Your spouse inherits everything.
- Spouse and descendants from you and that spouse. Your spouse inherits half and descendants inherit the other half.
- Spouse and at least one descendant from a previous spouse. Your spouse inherits 1/2 of your intestate personal property and 1/4 of the fair market value of your real estate, minus the value of any liens or encumbrances on that real estate. Your descendants inherit everything else.
- Spouse and parents. Your spouse inherits 3/4 of your intestate property and your parents inherit the remaining 1/4 of your intestate property.
- Parents but no spouse or descendants. Your parents inherit everything.
- Siblings but no spouse, descendants, or parents. Your siblings inherit all assets.
What Is a “Bequest?”
A bequest is a gift made in a Last Will and Testament. That gift is an inheritance, but not all inheritances are made via a bequest. A Last Will and Testament is a legal document that is used to express an individual’s wishes regarding his/her estate assets and what should be done with them upon the Testator’s (creator of the Will) death. Bequests made in a Will may be general (such as “half my estate”) or specific (such as “my art collection”) and may be made to an unlimited number of beneficiaries.
Contact Indianapolis Estate Planning Attorneys
For more information, please join us for an upcoming FREE seminar. If you have additional questions about estate planning, or you are ready to get your estate plan started, contact the experienced Indianapolis estate planning attorneys at Frank & Kraft by calling (317) 684-1100 to schedule an appointment.
Paul Kraft is Co-Founder and the senior Principal of Frank & Kraft, one of the leading law firms in Indiana in the area of estate planning as well as business and tax planning.
Mr. Kraft assists clients primarily in the areas of estate planning and administration, Medicaid planning, federal and state taxation, real estate and corporate law, bringing the added perspective of an accounting background to his work.
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