Assignment 6 - An Overview of Estate Planning Flashcards
- type of ownership
- exists when property is held jointly and only between a husband and wife. (always in equal parts)
- survivorship rights can only be term’d by BOTH
- protected by claims of cred. - asset protection vehicle in estate planning
tenancy by the entirety
property that is handled and distributed by the personal rep upon a person’s death
probate estate
trusts that allow an unlimited duration and that theoretically can last forever
dynasty trusts
type of will under which the debts, expenses and taxes of an estate are paid and then the residue of the probate property is transferred into a revocable living trust or an insurance trust
pourover
term for land and everything attached to the land w/ the intention that it be part of the land
real property
- type of other prop. interests
- term of person entitled to property after a life interest or term interest has ended
remainder interest
term meaning to die w/o a valid will
intestate
legislation that states that property acquired during marriage is owned 1/2 by each spouse
Uniform Marital Property Act
- type of ownership
- most basic form
- holds prop. in own name
- can sell it, use it as collateral, or give it away
- can pass prop. on to heirs w/in limits
Outright Ownership
- type of ownership
- 2 or more ppl have ownership rights in the same prop. at same time
joint ownership
- type of joint ownership
- if 1 of joint owners dies, ownership in prop. passes fully to other joint owner(s)
- exists b/w anyone
- equal parts of ownership
- survivorship can be destroyed by 1 of joint tenants at any time through sale of interest in prop., attachment by creditors, a court action for partition
Joint Tenancy w/ Right of Survivorship (WROS)
- type of joint ownership
- prop. is jointly held, but owners do not have the right of survivorship
- owners also don’t have to have equal parts in the property
Tenancy in Common
- type of ownership
- prop. that either spouse acquires during marriage from his/her income while living in a community prop. state
- each spouse owns 1/2 of prop. acquired during marriage
- this right moves with the couple
Community Property
- type of other property interests
- occurs when a fiduciary, appointed by the deceased, is legal owner of prop. that passes into a trust
- respons. for enacting terms of the trust agreement
legal interests
- type of other property interests
- entitles holder to income from or use of the prop. or a portion of the prop. for his/her lifetime
life interests
- type of other prop. interests
- entitles holder to income from or use of a property for a term of years
term interests
- type of other prop. interests
- occurs when the holder of prop. has immediate right to use, hold or otherwise enjoy prop.
present interest
- type of other prop. interests
- right to use or enjoy a prop. is postponed to some future time or is in control of someone other than the holder
future interests
- this code allows the spouse to obtain part of his/her spouse’s augmented estate upon death
- proportion of these assets may be determined by length of marriage
Uniform Probate Code
disadv. of passing prop. through probate estate
- delays in settling estate
- admin costs estate may be based largely on probate estate
- subj. to creditors’ claims
- made public knowledge
- disgruntled heirs issues
- state death taxes can be incr’d
legally enforceable declaration of intentions of estate owner w/ respect to disposition of his/her probate prop. upon death
Distribution by Will
duties of an executor of a will
steps in estate-settlement process
- assembling prop. belonging to estate
- safekeeping, safeguarding, and insuring prop. during estate admin.
- temp. mgmt of estate prop.
- pmt of estate debts, exp, and taxes
- acctg for estate admin costs
- making distrib. of the net estate to appropriate heirs
a fiduciary arrangement set up by a granto
r, whereby a person, corp. or org. has legal title to the prop. placed here
holds and manages property
trust
- type of trust
- created during a grantor’s lifetime to benef. grantor or someone else
- terms are contained in a deed of trust
- can be revocable or irrevocable
living trust
- type of trust
- created under a person’s will and doesn’t become effective until the person’s death
- terms part of grantor’s will
testamentary trust
- type of trust
- living trust that consists of life ins. policies during the insured’s lifetime and ins. proceeds at the insured’s death
insurance trust
- type of trust
- grantor reserves the right to revoke or amend the trust
revocable trust
- type of trust
- grantor doesn’t reserve the right to revoke or alter it
irrevocable trust
- type of trust
- 2 or more create a trust
joint trust
- type of trust
- allows income paid to a benef. to include princ. of inv. rather than just int., divs. and rent income
total return trusts
- type of trust
- permits a trustee to distrib. a fixed %age of current trust princ. to current income benef.
unitrusts
levied on the right to give prop. at death
estate taxes
starting point for calc. how much, if any, fed’l estate tax is due
gross estate
taxes levied on the right to receive prop. by inheritance
inheritance taxes
method of disposing prop. upon death w/o a valid will
intestate distrib.
assets that will go into one’s heirs after pmt of all the costs of dying, such as debts, claims on the estate, admin exp., and taxes
net estate to one’s heirs
the state or country where a trust is located
this governs its construction and admin.
situs
transferring property during lifetime
(lifetime transfers)
- lifetime gifts - outright, irrev. trusts, custodianships
- exercise of POAs
- exercise of power of appointment
- as noncharitable benef. of split gifts to charity
- sales w/in the family
transferring property at death
- by will - outright; in trust
- intestate distrib. (not desirable)
- life ins. benef. designations - indiv, trust
- qualified retirement plan, TSA, IRA benef. designations
- other benef. designations (NQA or NQDC)
- revocable living trusts
- joint tenancy w/ right of survivorship
- other arrangements
type of property other than land; could be tangible or intangible
tangible - car, jewelry, art or antiques
intangible - doesn’t have phys. subst such as stk certif., bonds, bank dep., or life ins. policies
personal property
forms of property ownership
- outright ownership
- joint ownership
- joint tenancy w/ right of survivorship (WROS)
- tenancy by the entirety
- other joint interests
- tenancy in common
basic nontax purpose of powers of appointment
to postpone and delegate the decision about who is to get property until a later time when the circumstances can be better known
