For a number of reasons (capital gains tax not the least among them) many people choose to leave property to their heirs by will rather than lifetime gift.
But wills are static, whereas people's wishes for their heirs change over time. Naturally, wills can be amended, which allows you to account for changes. But an amendment (or "codicil") to a will is time consuming and often expensive.
Many people, furthermore, find that would-be heirs receive unequal treatment during their lives as time passes. Take, for example, a couple with three children, Anna, Ben, and Christie. The couple write wills when the children are young, and thirty years go by. As the children aged, Anna and Ben paid their way through college and now support their own families.
Christie, on the other hand, would have dropped out of junior college but for her parents' money. Narrowly passing during her first two years, she later transferred to a state school to study hotel management, where she required even further help with tuition and expenses. Still later, Christie had two children, then divorced. Though she received custody of the children, Christie was not self-sufficient financially, and her parents helped raise their grandchildren.
The couple's original will had provided that the estate should pass in equal shares to Anna, Ben, and Christie. Thirty years after its drafting, this doesn't seem fair, since Christie had received a great deal of the parents' wealth during their lives.
So should the parents have re-drafted their will after every gift to Christie? Every five years? After 30 years? Regardless of when they're done, amendments to a will have the same effect: they freeze one's wishes in time, adapted only to the then-present set of circumstances.
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Enter the advancement.
In Georgia, an amendment to a will must be signed and witnessed (and preferably notarized) with the same formality as the will itself. It is also very important to have an attorney prepare an amendment.
But according to the Georgia Code in section 53-1-10, a lifetime transfer of property (i.e., a gift) can be made into an advancement of one's estate. The advancement must meet one of the below requirements:
Then, according to section 53-1-12 of the Georgia Code, the value of money or property the recipient of the advancement receives is counted against his or her share of the giver's estate.
If, like the couple above, people make large lifetime gifts to one heir, that heir's share of the estate can be made "equal" to the other heirs shares via a writing that records the gift as an advancement.
If this is done diligently, then there need be far less concern about amending a will later on to account for unequal treatment of children.
Advancers of testamentary gifts would be well advised to keep any writings memorializing advancements in the same location as their wills and to keep at least one additional copy in a safe place, such as an attorney's office. Furthermore, each written memo of an advancement should have a definitive statement of the advancement's value if such is not otherwise readily ascertainable.
Tanner Pittman, LLC advises clients on wills and estate planning and is experienced in litigation involving probate matters.
The full text of the relevant Georgia statutes can be found below
§ 53-1-10. Effect of lifetime transfer of property to beneficiary
(a) A lifetime transfer to a beneficiary of property that is the subject of a specific testamentary gift is treated as a satisfaction if it is shown pursuant to the provisions of subsection (c) of this Code section that the transfer is intended to satisfy the testamentary gift.
(b) A lifetime transfer of money or other property to a prospective heir or to the beneficiary of a demonstrative, general, or residuary testamentary gift is treated as an advancement if it is shown pursuant to the provisions of subsection (c) of this Code section that the transfer is intended to be a part of the share that the heir would inherit by intestacy or the beneficiary would take under the transferor's will.
(c) The intent to treat a lifetime transfer as a satisfaction or an advancement is shown only if the will provides for the deduction of the lifetime transfer or its value or if the satisfaction or advancement is declared in a writing signed by the transferor within 30 days of making the transfer or acknowledged in a writing signed by the recipient at any time.
§ 53-1-12. Effect of a satisfaction or advancement
(a) If a beneficiary has received a satisfaction, the beneficiary shall not receive any other property in replacement of the specific testamentary gift which is the subject of the satisfaction.
(b) If a beneficiary has received an advancement of all or a portion of a demonstrative or general testamentary gift, the value of the demonstrative or general testamentary gift shall be reduced by the value of the advancement.
(c) For purposes of this subsection, the term “distributable share” means the share an heir would receive under the laws of intestacy or a beneficiary would receive under the residuary clause of the transferor's will if the value of all advancements made by the transferor during life, except satisfaction of specific testamentary gifts and advancements of demonstrative or general testamentary gifts, were added to the actual value of the transferor's intestate or residuary estate at death. If a beneficiary has received an advancement of a residuary gift or an heir has received an advancement of an intestate share, the advancement shall be taken into account in the following manner:
(1) If a beneficiary or heir has received an advancement that is less than the value of that person's distributable share under the residuary clause of the transferor's will or the laws of intestacy, the share actually distributed to the beneficiary or heir shall be charged with the advancement so that the beneficiary or heir will receive only the balance remaining of the distributable share; or
(2) If a beneficiary or an heir has received an advancement that is equal to or in excess of the value of that beneficiary's or heir's distributable share, the beneficiary or heir shall receive no further share from the estate.
Tanner Pittman, LLC is a West Georgia law firm that specializes in estate services, civil litigation, and legal transactions.
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