Some people seek to use gifts at death as a way to recognize a long list of individuals and organizations important to them. In this article, we explain why making lots of small gifts in your will is a bad idea, and what you can do instead to make these gifts economically.
Why Making Lots of Small Gifts in Your Will is a Bad Idea
The cost of fulfilling lots of small gifts made through your will can quickly outstrip the gifts’ value. This is because the process of fulfilling a $100 gift compared to a $100,000 gift is not all that different.
Depending on your state, the executor or estate planning attorney may have to put on notice and get jurisdiction over all the people receiving gifts under the will, as well as those people who would have received your assets if you died without a will. All these back-and-forth communications need to be properly tracked and recorded.
By making gifts to a lot of different individuals in your will, you effectively are multiplying the time and cost of these communications. If the communications are managed by the estate planning attorney’s office, you can imagine how the attorney’s billable hours could easily outstrip the value of a small $100 gift.
The Best Way to Make Small Gifts Upon Death
If your heart is set on making lots of small gifts to different beneficiaries upon your death, the most economical way to do so is by utilizing an operation of law asset.
For example, you could deposit $10,000 into a payable-on-death checking account and name 10 different beneficiaries to each receive 10% of the funds in the event of your death.
This approach changes the gift from a probate asset –– something that you include in your will –– to an operation of law asset, which are usually much easier, faster, and more economical to distribute. Generally, all you need to effectuate the transfer is an original death certificate.