Allowances

In estate planning and testamentary dispositions, the term ‘allowances‘ holds a significant position.

Allowances in the law context will encompass a range of provisions and considerations.

These are designed to protect the interests of various parties involved, such as beneficiaries, heirs, and creditors. 

This blog post explores the nuances of allowances within legal wills, shedding light on types and importance.

Allowances For Spouses And Dependents

One of the fundamental aspects of allowances in wills pertains to providing for surviving spouses and dependents.

In many jurisdictions, some laws are mandatory.

Some of them are: a portion of the deceased person’s estate must be set aside to support the surviving spouse and dependent children.

These allowances are often called ‘family allowances’ or ‘spousal and child allowances.’

They ensure that surviving family members are not left without adequate financial support after the decedent’s passing.

Allowances For Funeral And Burial Expenses

Legal will commonly include provisions for paying funeral and burial expenses from the deceased’s estate.

These allowances are essential to ensure the deceased receives a dignified and proper farewell.

This will be without imposing financial burdens on the family.

Executors are typically authorized to allocate a specific amount or a percentage of the estate for these purposes.

Allowances For Creditors

Allowances within wills extend to creditors as well.

It is not uncommon for individuals to have outstanding debts at their death.

In such cases, the deceased person’s estate may be required to allocate a portion of its assets to settle these debts.

This is often referred to as the ‘creditorsallowance.’

It ensures that the deceased’s financial obligations are met before the distribution of assets to beneficiaries.

Homestead Allowances

Homestead allowances in many jurisdictions protect a portion of the family home or primary residence from being included in the estate for distribution.

This allowance helps safeguard the family’s shelter and stability.

This is particularly true in cases where the surviving spouse or dependent children continue to reside in the family home.

Year’s Support Allowance

In some regions, a ‘year’s support allowance‘ is provided to the surviving spouse and dependents.

This allowance is designed to maintain the standard of living the family is accustomed to for a year following the decedent’s death.

It acts as a safety net during the transition period and ensures that the family’s immediate needs are met.

Executor’s Allowance

Executors play a vital role in the administration of estates.

They often receive allowances for their services.

These allowances, sometimes called ‘executor’s fees,’ compensate the executor for their time, effort, and responsibilities.

This will be in managing the deceased person’s affairs, including the distribution of assets and payment of debts.

Discretionary Allowances

Legal wills may also include discretionary allowances granted to the executor or trustee to make decisions.

These will be regarding asset distribution that aligns with the overall intent of the testator.

This allows flexibility in addressing unforeseen circumstances or changes in beneficiaries’ needs over time.

Example 1: Specific Allowance For Education

Background Scenario: 

Consider a situation where the deceased, John Smith, highly values education and wishes to support the academic pursuits of his nephew, Michael.

Michael is passionate about engineering and aspires to pursue higher education in this field.

Will Clause:

“I hereby allocate the sum of $20,000 from my estate to my nephew, Michael Johnson, to be used exclusively for funding his engineering or related studies education. This allowance should be utilized for tuition, books, and any other academic expenses he incurs during his educational journey.”

Example 2: Maintenance Allowance For Pet Care

Background Scenario: 

Imagine a scenario where the deceased, Sarah Thompson, was a devoted animal lover with a beloved cat named Whiskers.

Sarah is concerned about the well-being of Whiskers after her passing and wants to ensure funds are set aside for the cat’s care.

Will Clause: 

“I designate the sum of $10,000 from my estate for the proper care and maintenance of my beloved cat, Whiskers. This allowance is intended to cover veterinary care, food, grooming, and other necessary expenses to ensure Whiskers’ comfort and well-being.”