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What is the difference between Default Allocation and Specific allocations?

The Covet site allows users to set two different types of allocations. Understanding the difference between the two types helps users make their intentions clear in their planning documents.

When asking the difference between Default Allocation and Specific Allocations, it is important to first understand what "allocation" or the act of "allocating" means. Please read the article titled "What does Allocation mean" for more information. 

The covet site allows two types of allocations:

  • Default Allocation
  • Specific Allocations

Default Allocation: 

The Default Allocation setting sets allocations across all the assets a user has in Covet. For example, If Ben sets his default allocation at 40% for Person A, 40% for Person B and 20% for Organization A (notice the default allocation settings must always total to 100%), upon Ben's passing it will be understood that Ben wished for:

  • 40% of the value of EVERYTHING he included in his Covet planning THAT HE DID NOT GIVE A SPECIFIC ALLOCATION to go to Person A...
  • ...40% of the value of EVERYTHING he included in his Covet planning THAT HE DID NOT GIVE A SPECIFIC ALLOCATION to go to Person B and...
  • ...20% of the value of EVERYTHING he included in his Covet planning THAT HE DID NOT GIVE A SPECIFIC ALLOCATION to go to Organization A. 

The most important things to understand is that 1) the default allocation only applies to assets that have not been assigned a specific allocation and 2) the Covet site automatically applies the default allocation to assets as they are being entered. Users must uncheck the "use default allocation" box in the settings for each asset they wish to give as a specific distribution.

Specific Allocation:

The Covet site allows users to specifically assign each particular asset to one or more beneficiaries if they choose. One way to think about the Specific Allocation settings is that it "overrides" the default allocation settings. For example, If Ben from the prior example has three assets, Asset 1, Asset 2 and Asset 3 and he sets the specific allocation for Asset 2 to go 100% to Person A, then upon Ben's passing it will be understood that Ben wished for:

  • 40% of the value of EVERYTHING he included in his Covet planning to go to Person A PLUS Person A receives 100% of Asset 2...
  • ...40% of the value of EVERYTHING he included in his Covet planning to go to Person B, EXCEPT ASSET 2 and...
  • ...20% of the value of EVERYTHING he included in his Covet planning to go to Organization A, EXCEPT ASSET 2. 

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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.