What does Allocation mean?

The word "allocate" can have more than one meaning in different contexts, but in the case of estate planning and on the Covet site, Allocation means: "an amount or portion of an asset assigned to a particular recipient." ¹

In estate planning "allocation" is tied to the act of distributing property. For example: If Ben has $1000 in a bank account and he allocates 50% to Person A and 50% to Person B, upon Ben's passing, it will be understood that Ben wished for Persons A and B to be entitled to $500 each. 

One can apply this same logic to a physical asset such as a piece of jewelry. For this example let's assume Ben allocates 75% of the piece of jewelry to Person A and 25% to Person B, upon Ben's passing, it will be understood that Ben wished for Person A to be entitled to 75% of the piece's value and Person B to be entitled to 25% of that piece. With a physical item like this, it is obvious that Ben does not expect that the piece of jewelry will be broken up into pieces as that would obviously harm it's value. Rather, Ben's intention is that whatever the piece of jewelry could be sold for at the time, should be split 75/25 between his two named beneficiaries. Either the cash proceeds from the sale of the item could be split 75/25 among A & B or an appraisal of the market value of the piece could be obtained and Person A could give 25% of the appraisal value to Person B and take full possession of the piece.

Within Covet, users can set two different kinds of allocations. Be sure to read the articles "How can I allocate my assets within Covet?" and "What is the Covet Default Allocation" for important information on this.

Source:

¹ Oxford Dictionary

-End of Article-

Covet does not provide any legal, investment, accounting, financial, and/or tax advice. The Covet site includes access to software and self-help materials, which are not substitutes for the advice of an attorney, financial advisor and/or accountant.