Estate Planning

Separate Ownership

Fully transferable during life

Only transferable at death through will

100% in probate

100% in gross estate

JTWROS

Two or more owners

Transferable during life with 1 approval

Automatic death transfer, NON probate

Gross estate 50/50 spouses, % contribution otherwise

Tenancy by Entirety

Spouses only

Transferable only with spouse approval

Tenancy in Common

Several owners

Transferable based on individual interest

Transfer on death by will only

FMV of interest in probate

Community Property

Two spouses

Transferable with approval of 2

Automatic transfer on death if S1 & S2, or in joint trust

Included in probate if not transferred

50% in gross estate

Mutual will

Will Made in agreement with another to dispose of certain property interests

Reciprocal Will

Each person's will designates all to the other person

Holographic will

Handwritten will

Nuncupative Will

an oral will

Survivorship clause

Clause in will naming beneficiaries that can't inherit unless they live for specific time after his death, can be 5-60 days

Intestacy

No Will-- state law determines and passes to spouse if community property or kids in equal shares, ownership at age of majority

Ancillary probate

probate for real property in a different state

Per capita

Each surviving beneficiary including children of dead beneficiary's get equal share

Per stirpes

dead beneficiaries children get proportional share of that beneficiary's interest

per capita by generation

all heirs in third generation get equal split of remaining after second generation survivors

Springing POA

Becomes operative once principal is legally verified as incapacitated

Durable POA

Agent can immediately act on behalf of principal, does not lapse if principal becomes incapacitatedG

General POA

Broad amount of decisions, but lapses if principal is incapacitated

Non-durable POA

Opposite of springing

Annual gift exclusion to individual

$19,000

Future interest gifts

Annual exclusion doesn’t apply due to a future interest

Examples of future interest gifts

Remainder interest in property, trust that accumulates income (except 2503b and c), Non-income producing property in trusts, Trust has a sprinkle or spray provisn

GIfts qualifying under annual exclusion

Must be present interest and directed to unlimited number of recipients each year

Exempt direct transfer gifts

Directly to school or medical

Gift tax return filing requirement spouses gift combined $40,000 to someone

Each files separately

Gift tax return filing requirement if spouses gift combined $20,000 to someone

Donor spouse files, other spouse shows consent

Lifetime gift/estate exemption

$15,000,000

Qualified Disclaimer

disclaiming the right to receive gift, goes to someone else

Qualified disclaimer requirements

Refusal in writing; writing received no later than nine months after date of transfer or date of person reaching 21; must not have accepted any benefits of interest; someone other than donee must receive

adding gift tax paid to basis of received gift

(FMV - Basis) / (“Taxable” amount of gift) * gift tax paid = added to donee’s basis

Sale of gifted property

If sold more than donor basis, use original basis and holding period.

If sold less than FMV, use FMV as basis and gift date as holding period.

If in between basis and FMV, no gain

Basis Calculation Spousal JTWROS

Even if differing basis, assumed to be split 50/50. At one’s death, surviving spouse gets step up of 50% of FMV

GST Tax

Two or more generations below; 37.5 and 62.5 years younger, in addition to estate taxes, same exemption amounts,

GST Taxable distribution

Distribution from trust to a skip person that WOULDNT otherwise subject to estate/gift tax

GST Taxable termination

termination by death, lapse of time etc resulting in interest in trust going all to skip person

GST Direct Skip

Transfer subject to estate/gift tax made to a skip person