Estate Planning Chapter 3

Front 1

Property

Back 1

Anything capable of being owned; includes actual outright ownership of material objects as well as a right to possess, enjoy, use, consume, or transfer something

Front 2

Real Property

Back 2

Land or anything that has been permanently attached or affixed to it; all property other than personal property

Front 3

Personal Property

Back 3

All property other than land or any interest in land; may be tangible or intangible

Front 4

Tangible Personal Property

Back 4

Anything that can be touched, seen, and felt; has physical substance

Front 5

Intangible Personal Property

Back 5

Property that does not have physical substance; the thing itself is only evidence of value (a representation of the value may be physical, such as a certificate or deed, but it doesn't necessarily make it tangible)

Front 6

Estate

Back 6

An interest in real or personal property that is or may become possessory or ownership measured in terms of duration

Front 7

Fee Simple Estates

Back 7

The largest most complete interest in real estate; an estate in which the owner is entitled to absolute ownership of property, with unconditional power to dispose of it during lifetime as well as the power to bequeath it to anyone at death; also known as an estate in fee simple absolute

Front 8

Life Estates

Back 8

The title of the interest owned by a life tenant; interest terminates at death

Front 9

Waste of Property on Life Estates

Back 9

(1) Failure to pay property taxes
(2) Failure to insure the property against forseeable losses
(3) Destruction of the property's income-providing source

Front 10

Estate for a Term of Years

Back 10

An interest in property established for a specific duration

Front 11

Future Interests

Back 11

A present right to possess or enjoy property in the future; includes remainder interests and reversionary interests

Front 12

Remainder Interests

Back 12

A future interest that comes into existence after the termination of a prior interest; a present right to future enjoyment

Front 13

Remainderperson

Back 13

The person entitled to receive the principal of an estate upon the termination of the intervening life estate or estates

Front 14

Indefeasibly Vested Remainder

Back 14

A vested absolute right to received property at some future time after the present interest ceases

Front 15

Vested Interest

Back 15

An absolute and presently fixed right to possess and enjoy the property either now or in the future

Front 16

Contingent Remainder

Back 16

A future interest in property dependent upon the fufillment of a stated condition before the termination of a prior estate

Front 17

Reversionary Interests

Back 17

A right to future enjoyment by the transferor of property that is now in the possession or enjoyment of another party

Front 18

Determining if a Reversionary Interst has been Retained

Back 18

If the estate transferred is less than the estate owned, then a revisionary interest exists

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Legal Title

Back 19

Fiduciary (trustee/guardian of the property): has possession of property and has the right to invest/manage the property

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Equitable Title

Back 20

Beneficiary: entitled to property benefits

Equitable ownership and beneficial ownership generally mean the same thing

Front 21

Situs

Back 21

The place where property is located or kept

Front 22

Taxation Consequences for Property

Back 22

Real Estate- taxable only by state of location/situs
Tangible Personal Property- taxable generally by state of locaiton/situs
Intangible Personal Property- may be taxable by any state having a reasonable connection to th property

Front 23

Domicile

Back 23

The place that individuals consider to be their permanent residence and to which they intend to return if they have temporarily left; more than one domicile is possible

Front 24

Establishing Domicile

Back 24

Several methods: voter registration, auto registration, driver's license, location of bank accounts, situs of principal residence, passport, reference to domicile in will, address with SS administration, payment of property and income taxes; religious or social clubs and organizations may also indicate domicile

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Methods of Concurrent Ownership

Back 25

(1) Tenancies in Common
(2) Joint Tenancies with Right of Survivorship
(3) Tenancies by the Entirety

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Tenancy in Common

Back 26

The holding of property by two or more persons in such a manner that each has an undivided interest, which can be sold or gifted at any time, and upon the death of one is passed to the person(s) designated in the deceased tenant's will (or by intestacy) and does not pass automatically to the surviving tenants in common
Ownership interest may be unequal, property may be real or personal; no survivorship rights

Front 27

Joint Tenancy with Right of Survivorship

Back 27

The holding of property by two or more persons in such a manner that, upon the death of one, the survivor or survivors take the entire property by operation of law
All joint tenants have equal rights and ownership levels, ownership can be severed; free of probate; selling your ownership interest severs the survivorship

Front 28

Qualified and Nonqualified joint interests

Back 28

Qualified is reserved for husband and wife (spousal) relationships; nonqualified is for a nonspouse joint tenant

Front 29

Jointed Owned Safe Deposit Boxes

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Joint tenants have access to the box, but the contents remain the property of the depositor

Front 30

Street Name

Back 30

Securities held in the name of a broker or another party rather than in the name of the owner

Front 31

Gifting within Joint Tenancies

Back 31

A gift will occur when the noncontributing or donee-joint tenant withdraws from the joint tenancy a greater proportion than the amount contributed- at that time the gift becomes irrevocable and complete

Front 32

Tenancies by the Entirety

Back 32

The holding of property by a husband or wife in such a manner that, except with the consent of each, neither husband nor wife has a disposable interest in the property during the lifetime of the other; upon death of either, the property goes to the survivor; exists only during marriage and is terminated upon divorce; ownership cannot be severed without consent of both spouses

Front 33

Advantages of JTWROS and TE

Back 33

(1) Property owned by tenants generally cannot be reached by creditors on one tenant by entirety
(2) Convenient for assets like bank accounts because it provides access
(3) Give one or both tenants feeling of security
(4) No probate delays or transfer costs
(5) Often free of death taxes
(6) Private arrangement not open for public scrutiny

Front 34

Disadvantages of JTWROS and TE

Back 34

(1) Property owned as JTWROS can be reached by creditors of an individual
(2) Potential gift taxes at the creation of some interests
(3) Possible additional federal estate taxes
(4) Supersedes will
(5) Estate may face liquidity problems

Front 35

Community Property

Back 35

Property acquired during marriage in which both husband and wife have an undivided one-half interest; not more than one-half can be disposed of by either party individually by will; AZ, CA, ID, LA, NM, NV, TX, WA, WI