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102 Cards in this Set
- Front
- Back
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Tenants by Entirety |
Only available to married couples |
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Transmutation Agreement |
Requires writing to change property character |
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Quasi CP |
Property acquired during marriage in a non property state that would have been CP if in a CP state. |
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Basis |
Value of property when you acquire it |
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Step up in Basis |
Value of property when someone dies |
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Gain |
Step up in Basis - Basis |
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Tenants in Common |
Owners have undivided right to use entire property. Right to transfer at death. Default ownership. |
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Joint Tenancy |
Equal part of property held by 2 or more people. No right to transfer at death, passes to remaining owners. Able to transfer without others signatures. |
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Unilateral Severance |
Able to sever joint tenancy |
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Tenants by the Entirety |
No unilateral severance. Only available to H & W. Prevents spouse from transferring property without both signatures. |
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Intestate |
Die without will or trust |
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Step Child not legal heir by law unless |
Became a step as a minor. Remained a step until decedent's death. Held out as a child. For some reason would have adopted. |
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Per stirpes |
By right of representation. By line of descent. |
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Real Property |
Land & any permanent attachments. |
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Personal Property |
The mobile home, tree in a pot. |
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Estate |
Ownership of any right, title or interest in property. |
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Fee Simple estate |
Greatest interest in owning property. |
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Life estate |
Right to use, possess, enjoy property for life. |
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Incapacitated |
Unable to manage their affairs |
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Vested |
It is sure to happen. |
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Contingent |
Not certain to happen. |
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Issue |
Great grandchildren, children, grandchildren |
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Legal interest |
Bare legal title to property, ownership & interest |
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Beneficial interest |
Right to use & enjoy property and benefits except for ownership |
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Durable power of attorney for healthcare |
Advance health care directive, durable power of attorney. Pain medication or pull the plug. |
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Surrogate Decision Maker |
Family If in complete agreement. Hospital. Statutory surrogate, 60 days or the period of the medical condition. |
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Escheats to the States |
No heirs for property |
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Specific beneficiaries |
Identified to receive specific property. |
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Minors as beneficiaries. |
5000 max gift with out a custodian |
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Pretermitted heirs |
Left out of a will or trust |
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Power of Attorney |
Authority a principal gives to an agent to act on the principals behalf. The right to transact business for the principal. |
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Transfer on death deed |
In place for 5 yrs. Personal residence only. Does not provide for contingent beneficiaries, or people dying out of order. |
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Testator |
Person drafting will |
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Testamentary capacity |
Nature of Testamentary act. Nature and situation of property. Understand next of kin. Impact of gift on kin. |
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Standard type of will |
Testator signs & 2 witnesses. Testamentary intent. |
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Statutory will |
Testator signs. 2 witnesses. Testamentary intent. Form will, fill in the blank. Only valid if blank in spaces. |
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Pour over wills with trusts |
Everything not in trust, transfers into trusts at time of death. |
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International wills |
Needs to be signed by an official. Witnessed. |
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Holographic wills |
Handwritten by testator. Pertinent parts must be handwriting. Words of Testamentary intent. Must identify property. Identify beneficiaries. Signed by testator. |
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Agent |
Attorney in fact. |
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General power of attorney |
Power over all accounts or transactions on your behalf. |
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Power of attorney |
Only valid as long as the person is alive and has capacity. |
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Durable power of attorney |
Survives incapacity |
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Springing |
Durable power of attorney Springs into action only when incapacitated. |
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Property acquired by Intervivos Gift |
Donee's Basis = Donor's Basis |
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Property acquired by Testementary Gift |
Donee's basis is FMV on date of death |
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Adjusted Gross Estate |
Gross Estate - Administration Costs |
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Fee Simple Estate |
Greatest Interest one can own in a Property |
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Irrevocable Trusts |
1. Settlor releases control of property 2. Transfers over $14k are taxable 3. Trust is seperate Taxable entity 4. Property removed from settlor's estate 5. Grandchildren beneficiaries are direct skips 6. Beneficiary or Trust is income tax payer 7. Can be a Creditor shield |
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Gifts to Minors |
limited to $5000 |
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Goals in Gifting to Minors |
utilize annual tax exclusion exclude value of gift from donors estate exclude post gift appreciation from donors estate shift income tax burden must satisfy present interest rule |
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IRC 2503 (c) Minor's Trust |
1. Trustee must have power to gift to minor all assets 2. trustee must distribute to minor when minor reaches of age 21 at discretion of minor 3. if minor dies, trustee must distribute to minor's heirs |
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IRC 2503 (B) Mandatory Income Trust |
1. trustee must distribute all income to beneficiary (no mandatory dist. age) 2. Annual exclusion only applies to interest 3. minor need not be final beneficiary |
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Crummy Trust |
1. 30 days or more right to withdraw gift 2. trustee must notify beneficiary in writing 3. beneficiary need not be a minor 4. no mandatory distribution age 5. trust can have multiple beneficiaries |
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Incidence of Ownership |
Any interests or rights that an individual maintains in an asset, including property and insurance, that allow the person to change, modify, use or benefit from that asset. This is important for determining estate taxes. An individual can reduce the size of his or her estate by gifting assets to beneficiaries, but, to avoid estate tax on the gift, the original owner must not retain any incidents of ownership in the gifted assets. |
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Special Needs Trust |
-Special Needs Person cant have more than $2000 or benefits get taken away
-Can be beneficiary but never trustee -hever have right to demand $ is given to them -key is not to hinder their public assistance |
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Trust for Animals |
21 years or life of animal |
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Asset Protection Planning |
-Creditor can reach any asset owned or controlled by debtor -Creditors cannot reach any asset not owned or not controlled by debtor |
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Spendthrift Trust/Clause |
person goes through money very fast, has no right to assign, transfer or obligate beneficial interest |
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Discretionary Trust/Clause |
Trustee has discretion to make or not make distributions |
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Foreign Asset Protection Trusts |
1. Geographical Location 2. No recognition of U.S. jurisdiction -must file in foreign jurisdiction 3. short statues of limitations |
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Domestic Asset Protection Trusts |
-Trustee must reside in that state -Revocable Trusts arent accessible to Trustees in that state -Administration must happen in state -settlor cannot be sole trustee -not immune to fradulent transfer rules -trust has to be setup 2-4 yrs before debt from lawsuit |
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Disclaimers |
if you reject property, you cannot suggest where it goes, if you do creditors can go after it |
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Charitable Giving |
1. Charitable gift of donor 2. income tax deduction in year of gift 3. reduce value of taxable estate |
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Public Charity VS. Private Foundation |
Public Charity 50% gift, 30% for use of Private Foundation 30% gift, 20% for use of |
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Charitable Remainder Trust (CRIT) |
income comes back to donor |
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Charitable Remainder Annuity Trust (CRAT) |
fixed amount comes back to donor |
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Charitable Remainder Uni Trust |
fixed % of principal comes back to donor |
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Tax Advantages of Charitable Remainder |
1. No Estate Tax 2. no gift tax 3. income tax deduction 4. no capital gains taxes |
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pooled income trust |
large trust that receives donations from many donors, the donor will receive a pymt back from the contribution |
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Fund Bypass Trust with Lifetime Exemption Fund Survivors Trust with surviving spouse's assets Fund Qtip with leftover assets of spouse |
ddd |
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Valuation Discount planning |
Taxed on FMV 1. Minority DIscount- transfer of minority interest in property (15-50%) 2. lack of marketability 3. fractional share- minority or majority interest 4. loss of key person |
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Summary Probate Procedures |
For Small estates under 150,000 1. Petition to determine succession to real property 2. affidavit for small estates less than 50,000 must be conceived within 2 yrs of death |
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ascertainable standards |
distributions limited to health, education, maintenance & support |
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QTIP |
1. all income must go to S2 2. principal to s2 if any taxed in surviving spouses estate deferred until surviving spouse dies |
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QDOT |
-taxes paid on each distribution of principal - surviving spouse cannot be sole trustee, at least a cotrustee -noncitizen spouse |
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elements of a trust |
settlor intent property purpose beneficiaries trustees |
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property held in trust avoids probate management during incapacity planning for family dynamics |
need to know the elements |
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Legal Interest |
bare legal title to property |
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beneficial interest |
right to use & enjoy, except for ownership |
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tenants by entirety |
right of survivorship, only for married folks |
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quasi community property |
property acquired during marriage while living in a non community property state |
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surrogate decision maker |
family hospital statutory surrogate |
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Direct Skip |
receives fee interest gst due at time of transferor, paid by estate |
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taxable termination |
remainder interest, taxes due at termination of intermediate estate tax payable by trust goes through the parent first and then the grandchild |
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taxable distribution |
distributions taxable to children, not grandchildren receiving the funds |
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annual gift exemptions= $14000 spouses= unlimited non citizen spouses= $148000 lifetime= 5,450,000 |
capital gains income tax 39.6 = 20 25, 28, 33, 35 = 15 10,15 = 0 |
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transfer on death deed to a real property |
in place for 5 yrs personal residences only does not provide for contingent beneficiaries |
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testementary capacity |
nature of act situation of testators property understand next of kin impact of gift on kin |
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standard will |
testator signs 2 witnesses - adults testamentary intent |
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statutory will |
testator signs 2 witnesses- adult form will, fill in the blank |
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pour over wills with trusts |
everything not in trust , transfers into trust at time of death |
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International wills |
needs to be signed by an official witnessed |
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holographic wills |
handwritten all pertinent parts must be in handwriting words of testamentary intent identify property identify beneficiaries signed by testator |
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intestate succession |
die without will or trust |
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step child |
became step child as minor remained step child until decedents death held out as child for some reason would have adopted |
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power of attorney |
authority to act on your behalf, right to transact business for the principal |
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durable power of attorney |
survives incapacity |
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rescind a gift |
undue influence, deceit, mistake |
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disclaimer trusts |
person denies right title that he or she would otherwise have title too |
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disclaimer |
surviving spouse has option to disclaim any portion of deceased spouses esate |
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irrevocable trust |
seperate legal entity, own tax id # & files tax returns |
