Methods to Transfer Property at Death

Question 1

Transferring under Operation of Law

Answer 1

Joint WROS

Tenants by Entirety

Using the State Titling

Avoids Probate

Question 2

Transferring under Contract

Answer 2

Qualified plans with a beneficiary

Life Insurance/Annuity contracts with named bene’s

Avoids Probate

Question 3

Transferring Property under a Trust

Answer 3

Also avoids Probate

Question 4

Transferring Property by Probate

Answer 4

Will

Intestate (don’t have a Will)

Could go through Probate if Estate named as Bene

Question 5

What is the Probate Process?

Answer 5

Process of Retitling Assets

Question 6

Advantages of Probate?

Answer 6

Clear Title

Open orderly legal process

Question 7

Disadvantages of Probate?

Answer 7

Costly

Delays

Publicity

Question 8

What doesn’t avoid Probate?

Answer 8

No Survivorship feature

No Benes listed

• Sole Ownership property
• Tenancy in Common
• Community Property
• Invalid or no named bene designations

Question 9

Tenants in Common

Answer 9

Two or more Undivided interest

could be 90/10 or 70/30, or 30/30/40 etc.

Question 10

JTWROS

Answer 10

Two or more undivided interest with survivorship rights

Avoids Probate

Non-married joint owners is based on your contribution % which is included in your gross estate
(I contributed 90% to the asset, sister only contributed 10%, then 90% of that asset is included in my gross estate)

Question 11

Tenants in Entirety

Answer 11

Only for Married couple with survivorship

Avoids probate

Question 12

Community Property

Answer 12

Married Undivided interest, with no survivorship, no gift splitting

Fruits of the tree are deemed Separate property unless retitled to community property

If married person dies in community property state with community property assets, then both halves of that interest will have cost basis step up to FMV

Question 13

Alan & Lynn are married & bought home for $200k years ago. Current FMV is $500k. Alan died & his will leaves everything to Costa (his child). Home was Tenants by Entirety, in a Common Law state. How much included in Alan’s gross estate & what’s the tax basis for Lynn?

Answer 13

Will doesn’t matter since it’s Tenants by Entirety

Half of FMV $500k=

$250k included in Alan’s estate

Lynn’s original basis is half the $200k = $100k

Alan’s stepped up basis of $250k in his estate gets transferred to Lynn’s basis

$100k+$250k=

=$350k Lynn’s new basis

Question 14

Anna & John are married & bought home for $200k years go. Current FMV is $500k. Anna died and her will leaves everything to Ryan (her child). Assume it’s Community Property. What’s included in Anna’s gross estate & what’s John’s basis after the death?

Answer 14

The will matters since it’s Community Property

Anna’s Estate: Half of FMV of $500k =

$250k in Anna’s estate

Community Property rule is that surviving spouse has their original basis step up to FMV on dead spouse’s date of death

John’s Basis:

was $100k, becomes $250k

(since that’s half of the FMV of $500k)

The other $250k is transferred to their son Ryan’s Basis