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How do gifts at death impact an estate plan?

It can be frustrating trying to decide how to create your estate plan. You may consider what people will expect, or you might worry that they will be sad, angry or frustrated by what you left them.

Your decision to change what you pass on to your loved ones could change at any time. While it may be simpler for your friends and family to enforce your wishes through your estate plan, there could be times when your plan needs to be more fluid.

Here’s what you should know about gifting an asset from your estate plan before you die.

Deathbed gifts

There are many emotions that you may feel during your final moments. For some people, the moments right before death are when they feel compelled to give gifts to certain loved ones. When you give a gift during these last moments, it is called a “gift causa mortis,” or a gift given as one contemplates death.

A gift causa mortis is slightly different from other types of gifts because it may be  revocable if the giver does not die of the condition or danger that made them contemplate death in the first place. Although you may still decide to give the same gift to the same person if you make an unexpected recovery, death is an essential factor for a true deathbed gift.

What about the will?

There is an essential distinction between a gift causa mortis and an item given in a will. While both gifts require that the gift-giver die for the gift to be complete, a recipient of a gift causa mortis owns the gift from the moment it is given, even in the giver’s final moments. On the other hand, recipients of intertestamental gifts do not own the gift until after death, and the probate process is complete.

When it is time to distribute assets from the estate, the will only considers property that still belonged to you when you died. In the case of a gift causa mortis, the gift goes to the recipient before you pass away and would not be up for consideration during the probate process.

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