Estates

The definition of Estate is property real and personal owned by individual(s) or entity prior to distribution through a trust or will. Zawisny & Zawisny engages in the following areas of Estate planning:

• Trusts       
• Gift Tax
• Wills
• Inheritance Law
• Uniform Probate Code
• Joint Tenancy

Trust

An agreement between two (2) or more parties under which money or other assets are held and managed by one person for the benefit of another.

There are different types of trusts designed to meet and address specific needs. Trusts vary in flexibility and degree of control.

Benefits of Trust

• Provides financial safeguard for beneficiaries
• Postpones and/or avoids unnecessary taxes
• Provides controls for administering property
• Meets desires and goals of benefactor(s)

Wills

A Will is a written document, usually prepared with the help of an attorney. A Will usually provides instructions regarding the hereafter care of a the benefactors' property. A Will is also known as "Last Will and Testament".

Types of Wills:

Simple Will:
A will that provides for the outright distribution of assets for an uncomplicated estate

Testamentary Trust Will:
A will that sets up one or more trusts for estate assets after death.

Pourover Will:
A will that leaves assets in a trust established before death.

Holographic Will:
A will that is unwitnessed and in the testator's handwriting. About 20 states recognize the        validity of such wills.

Oral Will (also called nuncupative will):
A will that is spoken, not written down. A few states permit these.

Joint Will:
One document that covers both a husband and wife (or any two people).

Living Will:
Not really a will at all--since it has force while you are still alive and doesn't dispose of property - but often executed at the same time you make your will. Tells doctors and hospitals whether you wish life support in the event you are terminally ill or, as a result of accident or illness, cannot be restored to consciousness. See chapter twelve.

Uniform Probate Code

The jurisdiction of the probate court includes, but is not limited to:

• Appointment and qualification of personal representatives.

• Probate and contest of wills.

• Determination of heirship.

• Determination of title to and rights in property claimed by or against personal representatives, guardians and conservators.

• Administration, settlement and distribution of estates of deceased.

• Construction of wills, whether incident to the administration or distribution of an estate or as a separate proceeding.

• Guardianships and conservatorships, including the appointment and qualification of guardians and conservators the administration, settlement and closing of guardianships and conservatorships.

• Supervision and disciplining of personal representatives, guardians and conservators.

• Appointment of a successor testamentary trustee where the vacancy occurs prior to, or during the pendency of, the probate proceeding.

Gift Tax

Regarding tax purposes, a gift is a transfer of property for less than its total value.
Most gifts are not subject to taxation. For instance, one can bestow up to $11,000.00 annually without penalty of taxation.

During one's lifetime up to $1,000,000.00 can be transferred. However if the beneficiary dies with an estate worth more than $2000,000.00, taxation will be based on the amount exceeding $2000,000.00. Taxes can climb as high as forty-seven (47) percent of the total worth of the estate.

Transfership of property during one's lifetime is not always a good idea. The party transferring assets to the receiving party, if assets exceed $1,000,000.00 in taxable gifts during one's lifetime the transferring party might be burdened with the forty-seven percent tax pertaining to transfer of ownership.

A common misunderstanding concerning the $1,000,000.00 tax break: the amount of $1,000,000.00 is what is available to shelter your estate. If it is used to shelter gifts from gift taxes, it can no longer be used to shelter your estate when you pass away.

Inheritance Law

Inheritance law regards the bequests of the deceased person provided in a will or living trust. First, the will has to go through probate, which means that the will has to be validated to ensure that it really is the last will and testament. The heirs named in the will must be contacted and all the assets named in the will must be verified, such as bank accounts, stocks, bonds and the monetary value of any real property, such as cars or houses. All the debts associated with the estate must be settled first before any of the inheritances are dispersed. This gives time for any creditors to come forward to collect debt owed on the estate.

The following procedures must be satisfied to execute a will. The executor (executrix) of the estate has to identify all the deceased's assets and collect them so that they are protected. Creditors must be notified according to the law of each state and all claims must be paid promptly. Any taxes owing on the estate also have to be paid in a timely manner.

When a person dies, it is also the job of the executor of the estate to inform the Social Securities Commission, insurance companies and credit card companies about the death and cancel all the contracts. All papers, such as inventory of the estate, accounting and legal documents, have to be filed with the probate court to get a court order for the distribution of the inheritances. A tax return must be filled and outstanding taxes must be paid. If inheritances are not adequately spelled out in the will, further investigations must be conducted to understand which beneficiary is bestowed what benefit.

In cases where there is no will, the inheritance law states that the estate still has to go through probate so that any creditors will get paid. Each state has its own procedure to follow in the case where there is no will, but the end result is that the family members do get inheritance that exists in the estate. The normal procedure is that if there are no children, the surviving spouse automatically gets the full estate. If there are children, then the division depends on the number of dependants. For example, the spouse receives one-half of the estate if there is one child and one-third if there is more than one child. In the event of each partner holding separate properties, the spouse receives the full value of the estate if the deceased does not have any surviving brothers and siblings.

If property in more than one state, then probate hearings have to be held in each of these states. Unless the inheritance is very large, over $1.5 million, a recipient will not have to pay a tax. The $1.5 million is considered the exemption amount and it is only when the gross value of the estate exceeds this amount that taxes are due. In any case, you will have to file an inheritance tax return with detailed information regarding the assets.

Joint Tenancy

When two or more tenants own equal shares in an account, such as a concurrent estate, with the right to survivorship. In this case, if one of the owners dies, the other tenants will split the shares equally. If there is only one other tenant, such as a widow, then they will inherit the whole share. A Joint Tenancy exists a Probate with a Judiciary Authority is not needed for the dispersment.

In order for a Joint Tenancy with Right of Survivorship (JTWROS) to take place, the tenants need to buy the title at the same time while sharing the same amount of interest and possession of the estate.