Last Will & Testament Tips: Use percentages, not hard numbers January 4
Unless you have a valid Last Will in place at the time of your death, even your loved ones may not have access to your estate – including money, property, and homes. That’s because the estates of those who die without a Will are supervised by the court system according to state law. Many times the state will claim almost everything for itself, leaving very little extra to be inherited by those to whom you may have wanted to leave your estate.
But when creating a Will it is a good idea to avoid using fixed numbers when leaving gifts of money. That’s because the financial health of your estate can change dramatically over the years – and can also be substantially impacted by your death. You may have a million dollars, for example, the day you die but if you die with unpaid medical bills or taxes then that number will change after your death.
Instead of using numbers such as “I would like to leave $10,000 to John Jones,” it is smarter to use percentages – as in “I would like to leave one percent of the money in my estate to John Jones.” That way the money left behind will be divided as you intended, regardless of how much money you leave. Stipulating a set dollar amount, though, does not allow any flexibility for interpreting your wishes in the event that the money left behind is more or less than you anticipated.
So “I leave 25 percent of my estate to each of my four children” ensures equal distribution. No matter how big or small the pie is, in other words, each one gets a slice worth one fourth of the whole pie. Nobody gets more than their fair share and nobody gets less. But placing a dollar amount might mean that there is not enough to give one-fourth to each child. Or if your estate grows in size the children might be left with only a fraction of the total amount – rather than a full 25 percent.