Estate Planning Flashcards
What are “advantages of an estate”?
Administration of the estate (court supervision)
Inventorying and valuation of the dedent’s estate
Paying bills and revolving credit issues
Overseeing distribution of estate as directed by will or by intestacy law
What are disadvantages to probate?
Loss of privacy
Exposure to will contest
Court, other costs and delays
Possible multiple state proceedings (ancillary probate)
What assets go into the probate process?
Singly owned assets (fee simple)
Property held tenant in common
Community property (half at first death)
Assets that designate the bene as estate
What can one do to avoid probate?
Revocable or inter vivos trust are effective probate avoidance strategies. However other techniques may also be effective such as transfer by operation of law. Most kindly property held joint tenants with rights or survivorship transferred by contract basically a beneficiary arrangement in life, insurance, annuity, contracts, retirement accounts, and qualified plans, Property conveyed by deed of title, government savings, bond, (co-ownership)
What happens if someone dies within 120 hours of each other where the uniform simultaneous death act USDA?
By law are deemed to be deceased each other this rule keeps the property of one disease person from passing through the state of another disease person before ultimate passing to those who survive both
What is a Totten trust?
This is a revocable trust in a bank account in which the depositor is named as trustee for another’s benefit. The depository retains the right of withdrawal until death when the deposit dies the balance passes to the beneficiary to trust operating in a few states.
In a community property state community property is treated how when it comes to probate?
Community property split the assets. There are no survivorship rights. Thus a will is needed in the property will be subject to probate, stupid California wants taxes.
What type of property in community properties get a step up in basis?
Only long-term capital gain property not ordinary income property
Is term insurance a CD and an IRA considered community property?
Yes, unless stated otherwise even term insurance has value if the insured nut did not die for potential death benefit
What community property gets a step up in basis?
A home and life insurance even if term. An example of someone paid one premium by the death benefit is $500,000.
If all property is considered community property than half of the community property is what?
Goes into the gross estate
A person in a community property state buys a property in a non-community property state what is the state treatment of said asset?
The property will be treated as probate in her state. It will go through ancillary probate. The property will be classified as community property because assets were purchased with her income, which is community property.
What is quasi community property??
Cause I community property is property that would’ve been property except for the fact it was acquired while the couple was living in a non-community property state
A non-spousal joint with rights or survivorship account in the state what are the issues?
If the non-spouse, living person cannot prove that they made contributions to the purchase of the joint property. The entire property will be in the gross estate for the first to die.
If a spouse dies what happens with the joint property in a non-community property state?
Half of the property will be included in the gross estate at the fair market value at the date of death
What are the components of form 706?
You have the gross estate, less funeral, expenses, administration, expenses, debts, taxes, and casually losses that equates the adjusted gross estate. You are then subtract marital and terrible deductions. You would then have the taxable estate you would add adjusted taxable gifts, amount exceeding annual gift exclusion. This creates the tax base you would take this amount minus the state tax deduction of $13.6 million for 2024 remainder is taxed at 40% tentative tax less gift taxes paid equals net estate tax.
