Estate Planning Flashcards
What are the Basic Estate Planning Documents?
Wills
Side Letters of Instruction
Powers of Attorney for property
Durable power of attorney for health care
Living wills or advance medical directives
Do not resuscitate orders
What is Ancillary Probate?
When a decedent dies intestate with real property in another state than their state of domicile
What is a Holographic Will?
When one handwrites their own will. Must sign and date it. Valid in most states.
What is a Nuncupative Will?
An oral, dying declaration made before a sufficient number of witnesses. Usually only good for personal property and may be limited by a dollar amount. Not valid in most states.
What is a Statutory Will?
A will drawn by an attorney, follows the statutes of the state, signed and dated, and witnessed.
What is a Reciprocal Will?
Two identical wills by two individuals that leave all assets to each other.
What is a Joint Will?
Two or more individuals execute one will for their common interest property
What Does a Bequest Clause Accomplish?
Leaves specific assets to specific people
What Does a Residuary Clause Accomplish?
Covers anything that is not named in a bequest clause to avoid being partially intestate
What Does an Attestation Clause Accomplish?
Witnesses who authenticate the testator’s signature, competence, and was not under duress
What Does a Self-Proving Clause Accomplish?
A Notary declaring that he witnessed the testator and witnesses sign the will.
What Does a Disclaimer Clause Accomplish?
Reminds any heirs that they can disclaim a bequest
What are the Requirements for a Disclaimer Clause to be Valid?
- The disclaiming property cannot benefit from the property (except the surviving spouse)
- Cannot benefit from any future interests
- Must disclaim within 9 months of decedent’s death
- Disclaimer must be in writing
What Does a Contingent Legatee Clause Accomplish?
Determines how to divide proceeds to deceased heirs descendents
What is Per Stirpes and Per Capita?
Per stirpes distributes a deceased heir’s inheritance to its decendents
Per Capita distributes assets evenly among all heirs and descendents of deceased heirs
How Can a Will be Revoked?
Testator can destroy it by shredding or burining it
The testator can create a new will and revoke the previous will
The testator can write “CANCEL” across the will in some states
How Can a Will be Changed?
By codicil (Supplement) May be executed like a statutory will
What is a Side Instruction Letter?
Exists separately from the will and names the testator’s wishes regarding specific tangible possessions and funeral/burial wishes
What is a Felonious Homicide Statute?
Many states use this statute to disinherit any legatees if they kill the decedent
What is Power of Appointment?
The power to direct assets to another
If a general power holder dies before the grantor, the assets will be included in the power holder’s estate
What is a Durable Power of Attorney?
The power lasts when the grantor becomes incapacitated and expires at the grantors death
What is a Springing Power of Attorney?
Powers aren’t effective until a defined event has taken place
What are the Community Property States?
Arizona California Idaho Louisiana Nevada New Mexico Texas Washington Wisconsin
What Property is Considered Separate in a Community Property State?
Property acquired before marriage, inherited, or gifted
What are the Basis Considerations for Community Property?
When one spouse dies, both halves get a step up in basis of FMV
What Value is Included in the Gross Estate of Fee Simple Property?
100%
What Value is Included in the Gross Estate of Tenancy in Common Property?
% Owned
What Value is Included in the Gross Estate of JTWROS Property?
If between spouses, then 50% deemed contribution rule applies
If not spouses, then the % contributed
What Value is Included in the Gross Estate of Tenancy in Entirety Property?
50% deemed contribution
What Value is Included in the Gross Estate of Community Property?
50% deemed contribution
What is Included in probate of Fee Simple Property?
100%
What is Included in probate of Tenancy in Common Property?
% Owned
What is Included in probate of JTWROS Property?
None
What is Included in probate of Tenancy by the Entirety Property?
None
What is Included in probate of Community Property?
50%
Does Fee Simple Have Automatic Survivorship?
No
Does Tenancy in Common Have Automatic Survivorship?
No
Does JTWROS Have Automatic Survivorship?
Yes
Does Tenancy of the Entirety Have Automatic Survivorship?
Yes
Does Community Property Have Automatic Survivorship?
No
Is Fee Simple Property Partitionable Without Consent?
Not Applicable; only one owner
Is Tenancy in Common Property Partitionable Without Consent?
Yes
Is JTWROS Property Partitionable Without Consent?
Yes
Is Tenancy by the Entirety Property Partitionable Without Consent?
No
Is Community Property Partitionable Without Consent?
No
Which Types of Property are Transferred Via State Contract Law?
Contracts with named beneficiaries: Life insurance policies Annuities POD/TODs Qualified plans IRAs SEPs
Which Types of Property are Transferred Via State Titling Law?
Property with survivorship features:
JTWROS
Tenants by the entirety
Which Types of Property are Transferred Via State Trust Law?
All assets already retitled into trusts
Which Types of Property are Transferred Via State Probate Law?
Fee simple Tenancy in common 1/2 community property Automobiles Household goods
what is the Difference Between Administrators and Executors?
Executors are named in a will
Administrators are named by the probate court
What is Abatement?
When insufficient assets remain to satisfy the legatee provisions causing a reduction in in amounts given to legatees
What are the Tax Implications for an Indirect Gift in the form of an Interest Free or Below Market Loan?
The lender must recognize “phantom interest” in their income
What is the Imputed Interest on Interest Free or Below Market Loans?
$0 to $10k = none
$10k to $100k = lesser of borrower’s net investment income or the Fed rate - State rate
(If borrower’s net investment income < $1k, then no imputed interest)
> $100k = Fed rate - State rate
What is a Net Gift?
When the donee has to pay the gift tax
What is the Donor’s Tax Liability in a Net Gift?
If the gift tax exceeds the donor’s basis, the amount in excess must be recognized as income to the donor
What is the Non-Citizen Spouse Deduction?
$139k
Unlimited for citizen spouses