Class Gifts: Leaving Assets to a Group

A class gift refers to a group of assets that is given to a group of beneficiaries and then divided among them. The group of beneficiaries that a class gift is meant for can be expected to change – either by expanding, or potentially growing smaller – between the time a last will and testament is drafted and executed and the time of the testator’s death.

The benefit of passing on estate assets via a class gift is that the class gift allows a testator to identify an entire group of beneficiaries by describing them as a class, or group. Setting out the parameters that define their status in the class, as opposed to identifying each individual in particular. For instance, a testator may want to leave an inheritance to their grandchildren, but does not yet know how many grandchildren they will have or precisely who those individuals will be by name at the time the will is drafted and executed.

Class Gift: Definition

The Restatement informs us that a class gift is “a disposition to beneficiaries” who take part of the inheritance as members of the group. The Restatement goes on to state that “Taking as members of a group means that the identities and shares of the beneficiaries are subject to fluctuation.” This fluctuation is due to the fact that, depending on how a group is defined, fewer or a greater number of individuals may fit within the parameters of the defined group at any given time. For example, a class gift set aside for a testator’s “grandchildren” may grow if additional grandchildren are born or discovered, and could also shrink if any of the grandchildren pass away prior to the testator’s own death.

The Restatement further states that a testator is presumed to have created a class gift if the terms of the stated disposition identify the beneficiaries only by a term of relationship, or another group label. So, for example again, a bequeathment to “grandchildren” or “children” would likely be presumed to be a class gift.

The presumption laid out above is rebutted if the language of the last will and testament or the surrounding circumstances establish that the transferor intended the identities and shares of the beneficiaries to be fixed and well-defined.

Why A Class Gift?

Those who leave a class gift may choose to do so because they want to leave property to a dynamic group of individuals: meaning, that those who belong in the group may change over time. This mechanism enables individuals to avoid having to revise the will every time a member of the class is born, discovered, or passes away. The class gift covers any individual who fits the class.

One way in which testators can utilize class gifts to achieve their estate planning objectives is by specifying that only the class members who survive the testator will receive from the class gift. This could come into effect, for example, if a testator specified that they want to leave a class gift to benefit each of their children who survive the testator by one day. While each case will vary and it is important to work with a knowledgeable wills & probate attorney, what this could mean is that your child and their estate will only inherit if they outlive you, the testator. This could limit the ability of the estate passing into your child’s estate, and will instead re-distribute to the other members of the class, if that is your wish.

A disadvantage of leaving a class gift is that disputes might occur about who is included in the group and when the group is meant to close. For example, if a last will and testament leaves a class gift to a group described as “my church group” – who, precisely, would that include? What makes someone a member of that particular group? Where does it cut off? It is important to define a group well enough that your ultimate wishes are best served and carried out. Experienced will & probate attorneys can help.

Contact Suncoast Civil Law

Contact the knowledgeable Sarasota wills & probate attorneys at Suncoast Civil Law with any of your Florida wills and probate questions.

Source:

flrules.org/gateway/RuleNo.asp?title=GIFTS%20AND%20HONORARIA&ID=34-13.210