Dollar Amount
or
Percentage . . .

What is the Difference?

Q:

Like most Americans, creating a will had been on Sophie's mental "to do list" for about a decade, but she had never gotten around to it. When she learned her best friend's daughter, Sarah, recently accepted a position at a local estate planning firm, Sophie immediately scheduled an appointment.

After so many years of thought, Sophie was able to reel off the various specific dollars amounts she wanted to leave each of her 8 beneficiaries. Attorney Sarah suggested Sophie leave her beneficiaries percentages of the estate rather than dollar amounts, but Sophie couldn't see any difference.

Attorney Sarah then asked her, "If your estate grows or depreciates by the time you pass on, do you expect these dollars amounts to accurately represent the same portion of your estate you intended to give your beneficiaries?"

A:

Because the testator's estate is likely to increase from the time he or she creates a will until the date of death, that specific amount bequest will likely represent a smaller portion of the estate than when the will was created. Therefore, when a testator leaves a specific amount bequest to someone, the advisor should let the testator know that amount is not likely to have the same value at the testator's death.